While experts anticipate the financial markets will begin showing signs of a sustained recovery sometime in the second half of 2009, it would be foolish to assume that it will be “business as usual” for those charged with investor relations. Historic changes have taken place that will permanently affect all sides of the Street – from the seismic shifts that have forever altered the banking landscape to the continued erosion of the sell-side analyst community to the diagnostic process used by investors to scrutinize investment alternatives.
One thing is certain: given the glut of once-in-a-lifetime valuations of household-name stocks that will be available to investors, all companies – but particularly lower-profile, micro-to-mid-cap companies – will have to work harder than ever before to regain the attention of the Street. A recovering market is a buyers’ market, so you cannot afford to wait for the Street to find you.
Here are three steps you can take now to make sure your IR program will be ready for the recovery:
- Refine your messaging. Over the next 12 to 15 months, investors will be looking for security. Therefore, companies with sound business models – built to produce solid financial results with strong liquidity – will have a competitive advantage. Companies will further separate themselves from the pack as “safe bets” by offering near-term growth opportunities that are not capital-intensive and/or can be funded by internal resources. Addressing the security quotient in your messaging will help investors understand that your company is poised to prosper in the recovery.
- Rethink your online tools and strategy. Investors have had to change their business practices to reduce costs and maximize profitability. Today they are relying more heavily on the Web for “free” data when identifying and evaluating investment ideas. Your IR site should serve as a 24-hour “call center” that has relevant information in a user-friendly format. You should also evaluate and selectively take advantage of online and social media platforms that can help you raise your profile with investors.
- Revitalize your targeting efforts. Even in the best of times, attracting and retaining loyal, long-term investors is easier said than done. During a market recovery, competition for these investors will be ferocious. Compounding matters in this recovery is the fact that the long-time channel to the Street – the sell-side analyst – will not be as widely available as in past recoveries. Thus, you will likely need to consider alternative roads to the Street, including targeting current shareholders who have the capacity to build their positions; investors in your own backyard where you have higher name recognition; and brokerage houses, which can help tap into the retail community in an effective and efficient manner.
The coming recovery will offer unique opportunities for companies with compelling growth strategies and the resources to fund them. Now is the time to get the messaging, tools and plans in place to ensure that your company’s story is reaching the right investors.