Investor relations is one of the most important departments for any public company. The department focuses primarily on providing meaningful and timely information to the company’s investors, while also ensuring that the company’s perception – especially to members of the public -is rock solid.
Investor relations is also critical to the long-term standing of a company. You want to make sure that your organization is generating the right kind of buzz to the general public, but you also want to keep things moving calmly when it comes to your investors and shareholders. At the end of the day, these people hold a significant amount of importance to the future of your company. It is important to keep them in line.
For most companies, investor relations is a subset of public relations. However, while public relations looks to strengthen the company’s outlook with the general public, investor relations focuses more on the company’s investors and shareholders. Many of these people will prefer an opportunity to speak with the company and its officials, especially when market situations and conditions might not be so optimal. Investor relations will help to handle this task.
Getting to Know Investor Relations
When a company goes public, one of the most important things to always look at is the stock price. Stocks are usually quite finicky, and their values can be affected by just about anything – including the perception of the company from the public and its own investors.
To wit, investor relations helps to calm investors down and provide any piece of information that they might need.
The primary objective of a company’s investor relations department is to ensure that its stock is fairly traded. To do this, they provide information that helps investors determine whether the company is truly an appropriate investment opportunity for them. Also, investor relations can share information with shareholders, government regulators, and other important players in the policy and financial community.
Most companies actually start building their investor relations departments before they go public. During this phase, the departments can help to build a proper structure that includes corporate governance, auditing and compliance, and communications with potential investors.
Investor Relations Requirements
Investor relations teams are usually tasked with handling shareholder meetings. They can also take charge of company press conferences, and they share their input when the time comes to share financial data and provide analyst briefings.
Other tasks include sharing information with regulators – particularly, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) – as well as handling communications in the event of a financial crisis.
Lastly, the investor relations department will also have to interact with investment analysts who provide opinions about the company and its role as a possible investment opportunity. These opinions tend to influence the entire financial community, and the investor relations department will need to properly manage these analysts’ expectations.
Unlike many other parts of public relations, investor relations departments will need to be well coordinated. The department needs to be tightly knit, and it will need integrations with several other departments – including legal, accounting, compliance, and the entire executive management team. The Chief Executive Officer (CEO), Chief Operating Officer (COO), and Chief Financial Officer (CFO) will also need to have easy access to the investor relations department for seamless information dissemination.
The Critical Parts of an Investor Relations Strategy
Now that we understand what investor relations is, here are some important aspects that should be in each strategy going forward.
Perhaps the most important part of an investor relations strategy is the company’s story. It should be clear, concise, and compelling – so as to boost the company’s credibility with investors and help them to understand where you’re coming from.
While formulating the story, look to highlight the company’s products or services – but, don’t sound too sales-y. You should also show the company’s position within the industry and highlight opportunities that could come in the future.
A Plan to Meet with Top Names
You need a clear and effective plan to meet with investors and analysts. Note that this extends to those who already interact with the company and those you’re looking to attract.
This step includes attending conferences, organizing roadshows, conducting investor hangouts, and hosting visits. You should keep in mind to prioritize quality over quantity when it comes to these meetings. You should also make a note to look beyond your locality.
A Proper Company Website
Investors who are unable to reach the company will go through its website So, have a polished and accurate website that is ready to accommodate them. The website should be accurate and interactive, and you could even have an investor relations section where prospective and current investors can get important information.
In the investor relations section, include things like shareholder meeting details, upcoming events, links to webcams and seminars, and the latest company news.
A Firm Schedule
Your company needs to put up a perception to investors. You want people to believe that you’re organized and focused on a specific assignment. Investors can become panicked at any small misstep, so you want to avoid those. When you post a schedule, be sure to stick to it. This way, you show investors that you’re reliable and dependable at all times.
If the need arises to postpone a meeting or a conference, be proactive and let investors know beforehand. Share the reasons for this setback and explain your remediation plans. You can also follow up to keep tabs on progress.
A Plan to Take Care of Emergencies
No one ever likes to hear bad news or be in an emergency situation. But, these situations tend to happen once in a while. So, you need to handle them when they do.
In cases of emergencies, it is important to remain transparent with your investors. Companies with the strongest management schedules encounter financial losses or crises from time to time. What determines the outcome is how they handle it.
This is why you need a plan of action now. For instance, if you will miss analysts’ stock estimates, build a plan to speak with them on why you were unable to meet the numbers.