Investor relations (IR) can make or break your IPO. Learn how to maximise shareholder value while building strong relationships to position your company for success with these 10 essential IR practices. 

Investor Relations is responsible for managing the communication and relationship between a company and its current and potential investors. Its primary goal is to maximise shareholder value by providing shareholders with accurate, timely, and relevant information about the company, and ensure that shareholders have a positive view of the company

IR is essential if your company is looking to enhance and maintain long-term shareholder value, the relationship with your shareholders and stakeholders is crucial for your company during its tumultuous period of growth. To build and maintain strong relationships with investors in the lead-up to IPO, companies must ensure they implement successful IR practices.

Based on our success with client campaigns, Barclay Pearce Capital (BPC) has developed 10 key practices that should be considered on the pathway to listing (IPO).

Communicating with Investors

Communication is one of the key pillars of success.

Investors play a major and vital role in the success and growth of a company and they expect a high level of communication and candour. Trust and transparency are essential when dealing with investors  and it takes time and effort to build trust which can be easily broken in seconds. When that trust is compromised, it can result in major consequences on the investor and your business. 

You owe it to your investors to provide them with guidance and go above what is required legally. Doing so increases investor relationships and the goodwill reputation of your company.

Alphabet, the parent company of Google, is known for its effective communication with investors. They provide regular updates on financial performance and strategic initiatives through a variety of channels - including its IR website, press releases, and quarterly earnings calls. The company further engages with shareholders through conferences and events, to build lasting investor relationships. 

Learn more about the importance of communicating with investors and other common IR mistakes through our 1 Minute Podcast.
 

Clarity and Compliance 

Equally important as communication is clarity or compliance. Clarity encompasses all of
the “nitty-gritty” aspects of IR, focusing on addressing concerns related to
ensuring your company acts legally and ethically. Companies should use clarity
in all business proceedings by:

• Informing shareholders of all relevant issues
• Ensure management and company representatives act professionally.
• Provide accurate reporting (not sweeping things under the rug or exaggerating performance)

If investors find out they have been deceived, your company will likely see a drastic decrease in investor performance, further damaging its reputation.

As reported by a Deloitte article, Rob Binns, the former VP of IR at HP and current CFO of the Access Group voices his view on business transparency and clarity, stating that it is absolutely critical.

“In our case, management is executing on a five-year turnaround plan….and helping investors understand what the milestones are and what they can reasonably expect along the way is incredibly valuable.” The feedback from investors, he adds, is that “They welcome an honest, straightforward story—they don’t want to be sold to, they don’t want to be spun to.” 

Exposure

An exciting part of IR is using creative ways to increase exposure. If investors notice a brand is active in widening its audience, where it connects and collaborates with other
entities, it may be seen as a step towards growth within the business. The more people who are aware of your company, the more authority your company has within the market. This was the approach we took when coming up with a strategy for Whitehawk Inc (ASX:WHK). The IR campaign focused on involving WHK in key investor events across Australia, in turn improving brand awareness and messaging. This would ultimately lead to increased credibility, cementing WHK as a thought leader in the online cybersecurity space. 

Staying Visible

 
Today's Market is extremely competitive, and it is easy for your company to fall between the gaps. Companies that engage consistently with their investors rise to the top. Businesses should build upon their initial exposure to stay relevant and always be front of mind for their investors and not get lost in the abyss of other investment opportunities. An organic way to achieve this is by utilising social media platforms like LinkedIn or even email, to consistently communicate with and update your existing and potential investors.
 

Activist Investors

Activist investors are those who truly believe in your company. They recognise its potential for success and want to help beyond financially. Activist Investors often express their say in your company affairs and it’s up to your business to listen and act. An activist investor might have a brilliant, game-changing idea or they may have something that has already been tried and doesn’t work. Either way, it is important to collaborate with those who are putting in the time to improve your company.
 

Operating in the state of Flux

It’s no secret that the stock market is a volatile force within the economy. Once a
business offers its stock to the public, it must be adaptable. IR gives your company the ability to be proactive and quick to respond to unforeseen events and news, in turn maintaining their relationships with investors and overall reputation. The market is full of unpredictable situations, so it helps to be as prepared as possible for any situation and assure your investors that whatever happens, your company is prepared for it.
 

Be Knowledgeable 

Being responsive is essential. However, your IR strategy is only successful if your
response makes sense and proves that your company understands the situation. A company that stays on top of news and current affairs which impact them and consistently addresses these situations assures investors that your company understands the market and can operate accordingly. IR should frequently work with the C-suite to produce content and statements, so your investors understand that those in charge are knowledgeable and capable. Working with the C-suite provides a ‘face’ to your company, which is becoming more appealing to the newer generation of investors. 
 

Value the stock intrinsically - Not via stock rating 

It is important for all IR managers to value their company via the intrinsic value of the stock rather than what the market has determined the price is. IR managers should work with what they know is realistic and thus establish realistic expectations for shareholders. On the other hand, it is critical to assure shareholders that your company is still performing well even if the stock is not. This may include informing them of external factors, such as a bear market trend, which may be negatively influencing the price of the stock.

Visa Inc. establishes this initiative effectively, focusing on the intrinsic value of its underlying businesses and long term growth prospects, rather than short-term market trends and stock ratings. This positioned the company to maintain strong stakeholder relationships by delivering long term value. 

Precise Decision Making

Analysis paralysis can be detrimental for your company, trying to time the market in an
attempt for the ‘best time’ to communicate with your investors. Waiting on good news, not wanting to release bad news or a potential successful deal to make a press release, can leave investors in the dark for long periods of time. With a lack of communication comes a lack of investor enthusiasm. This reiterates that IR personnel should work with a company’s C-suite to ensure they are being precise and direct with their decisions and urge them to be clear with their intent. Investors who see those in charge as incapable of making decisions will undoubtedly lose faith in the stock.
 

Record of Performance

This practice is critical for operating in an evolving and competitive market. It relies heavily on the evaluation and analysis of previous campaigns and business performance. Analytics must be utilised by all companies to improve on their weaknesses to understand what worked and what didn’t. Businesses must work with IR to utilise the tangible results produced by analytical tools to evaluate what strategies can be utilised when moving forward. Using CRM platforms can provide a database for all your investor clients. This can involve insights about what company e-newsletters they’ve subscribed to, helping you build their investment portfolios accordingly. When investors are provided with a record of performance that shows tangible evidence of increases in the company's finances, operations and/or ESG initiatives, they are more likely to maintain trust in the company's future.

As you can see, executing professional IR practices is crucial for any company, including listed companies or those who are looking toward a prosperous IPO. Companies must position themselves as high-return providers to investors. Successful IR practices will further strengthen and maintain your relationship with investors, flourishing in the instance of good news and instilling a sense of understanding and loyalty whenever there is bad news. 

Ready to make the most of your IPO and level up your investor relations? Schedule a free exploration call with our experienced team to discuss your IPO needs and learn how we can help you achieve your goals.