Many newly listed companies do not start their IR program until it’s too late, don’t be one of them.
By Jeffrey Stanger, ITB Solutions
Waiting until your company is public before structuring your Investor Relations Program is a mistake too many executives make. Many companies get caught up in the excitement of going public without planning out a strategic IR program. What they do not realize is that they are entering an entirely new market of hundreds of thousands investment vehicles competing for investors’ attention. Management has to be prepared to let the investment community know why they their particular vehicle is the right one. Remember: By being public you now have two businesses — the core business of your company, and the marketing of your shares.
Once you have decided to take your company public and are proceeding down that path, the first step is to evaluate your online presence. Do you have a website? If not, before you contract someone to develop it make sure they have both the experience and services for an investor relations component. Your online presence will be one of your most powerful investor communication tools. If you do already have a website, determine whether or not your website provider can implement online investor relations tools. These include press releases, SEDAR filings, stock quote provision, management, event calendars, etc. If they cannot do it, find a firm that can.
After you have properly planned your online IR presence you then need to look closely at your ‘offline’ IR strategy. Will you have it in-house or will it be contracted, or both? Whichever method you decide on, source out potential IR professionals and/or firms. Examine other companies they recently provided IR services to, and don’t judge them merely on the stock chart of the company. IR professionals can only work with the results that the company’s management provides. They cannot increase a stock price without the results to back it up. Professional IR people/firms will make sure that your company is valued properly. Many companies have great results or prospects but without the proper IR program these results will not translate to the stock price.
The IR professional or firm that you engage will work closely with your CEO and CFO. The CEO’s IR function is to tell the overall story of the company to the investment community and the IR professional is there to not only reach that audience but also to advise the CEO on the main points they should focus on. The CFO’s investor relations role is to speak to the financial analysts and investors who focus solely on “the numbers”. Since the IR professional has created this audience, they can identify to the CFO those parties that are focused on earnings or cash flow. Your IR professional will have a good sense of what kind of information the market is looking for.
When you start on the path of going public, whether through an IPO, Non-Offering Prospectus or an RTO, you should make an arrangement with the IR professional or firm and engage them at a discounted rate until the company has become public. Keep them apprised of all developments, and ask for their insight and advice every step along the way. This way they will be completely prepared to get your story out to the investment community once you are public, and can hit the ground running. Do not expect them to do this for free. A professional IR firm/person will focus on the clients they already have and organize their time appropriately.
While the management team is creating its corporate governance policies, a good idea would be to work with your IR professional to create an Investor Relations handbook for internal staff. This way everyone is on the same page and people will not be providing different variations of information to the marketplace. This handbook should also describe what is permitted to discuss publicly and what is not. Just because someone has become an officer of a public company does not mean they are familiar with the rules and regulations governing corporate disclosure.
Remember, your IR professional can be as important as your CEO and CFO to a public company. Don’t dismiss the value of this integral part of your company’s management.
Since 2005 ITB Solutions has provided listings development services to stock Exchanges in Canada such as the Canadian Securities Exchange. ITB Solutions currently provides New Listing Services to the NEO Exchange. We assist companies with the listing application and managing the process to become publicly tradable in Canada, as well as offering advice on how to make the most of your public listing. You can reach Jeffrey Stanger at 647-500-0492 or by email at [email protected]