Investor Relations: How Open and Engaging is Your IR Program?

"Don’t be the company that views Investor Relations as Just Another Guy!" - The Fit It IRO

Most executives wish to be in their roles for a long time. The prestige, power, and compensation associated with being a public company executive is lucrative. Furthermore, executives do not wish to change positions every two years. Did you know that your ability to achieve stability as an executive represents a function of investor relations?

Executive tenure and compensation are achieved through a clear and confident, engaging and transparent investor relations program. Investor relations from a Wall Street perspective can be the difference not only between a long and short tenure, but also the difference between being taken out on your own terms or the terms of an arbitrary, and likely unattractive investor.

Many executives will tell you that good investor relations consist of not getting yelled at by investors. Success looks like a day of investor conference speed dating filled with the continuous banal banter of benign investor questions. Investor relations should do more, mean more, and provide greater value to the organization.

If public company executives are looking for longevity and maximum compensation, investor relations can help. Good investor relations can ward off the major drivers of a short executive tenure, including: short attacks, activist investor attacks, private equity, and hostile take-overs.

Short Attack: Clear and confident, open and engaging investor relations programs maintain complete control of the company narrative. Being in control of the narrative via a four tool IR program, a well-defined competitive set, and solid analyst coverage creates a defensive moat around the company that keeps both short attacker and activists at bay.

Activist Investor Attack: A closed approach to investor relations makes the company susceptible to an activist attack. Similar to a short attack, a lack of control around the company narrative, and lack of defensive moat, allows the activist to hijack the company narrative. Once a short or activist wrestles control of the narrative from you, it is difficult to get it back.

Private Equity: A poor investor relations program often leads to depressed valuations, and in a worst-case lack of interest from investors. When the company struggles to execute, and poor investor relations fails to communicate with investors, valuation declines. If investors are able to get an idea that the executive team may be the problem, private equity will start to sniff out a possible deal. Good investor relation programs that control company narrative can lead to multiple offers, or at minimum terms that are likely more palatable to the company.

Hostile Take Over: A closed and secretive IR program versus an open and engaging IR program often represents the difference between an attractive offer and an ugly one. Investor relations from a Wall Street perspective can help the company achieve an unbelievable price in a hostile take out. A great investor relations program that sets a compelling company narrative around key secular growth drivers and benefits from solid execution will attract compelling offers. Good investor relations combined with solid execution always yields maximum monetization for the company.

Clear and confident, transparent and engaging investor relations that control the company narrative determines public company executive tenure.

When Blue Horseshoe likes your company, investor relations from a Wall Street perspective is the difference between being forced to accept the destruction of Gordon Gekko, or exiting via a white knight like Sir Larry Wildman. The decision is yours!