Over a 28 year career as an equity analyst and fund manager, I’ve taken part in thousands of investor meetings as an existing or potential shareholder and as a representative of a listed company. On the whole, management teams are well-served by internal investor relations professionals as well as external advisors. What follows is an experienced investor’s view of some of the ingredients for a successful roadshow.
Management may undertake a roadshow programme for many different reasons above and beyond their basic duty to shareholders. The following objectives are common to most:
- Provide clarity on key company developments
- Clear up any misconceptions about company performance
- Establish/reinforce a realistic medium to longer-term narrative about where the company is heading
- Build management credibility with investors.
To achieve these objectives, it’s worth considering the following factors:
1) Know your audience
There are many different “consumers” of company roadshows. The needs of media differ from analysts, buy-side analyst needs differ from the sell-side and fund managers’ needs are different again. Big investment management firms operate differently from boutiques. The investment time horizon, style and process between and even within individual firms can also be highly differentiated. Company investor relations teams need to understand the landscape and how this may impact their message.
2) Be clear about the reason for the roadshow
There are lots of reasons for company management to want to meet with investors. It’s important to be clear about why a roadshow is taking place. Is it a regular update with main shareholders after results? Is it event driven? Focusing on strategy/long term plans? A briefing on specific areas of the business? The content and the team that represents the company may be quite different depending on the agenda. Be aware, however, that whatever your agenda may be, investors may have a completely different set of priorities when you meet them!
3) Understand the range of views in the market about your company
It’s wise to be aware of who your investors are talking to when forming a view on your company and which external analysts they rate. It’s best to avoid dismissing analyst views, they may have spotted something important and it’s a bad look for management to reject independent opinions out of hand. However, be prepared to directly address contentious issues and clear up any misconceptions.
4) Don’t gloss over problem areas
Building management credibility should be a key objective of any roadshow. There are many reasons why investors buy and sell company shares, many of them are nothing to do with company management. A key objective of all investor contact should be to be seen as knowledgeable about your business, highly competent and trustworthy. Investors tend to be a fairly cynical bunch, anything that suggests a lack of candour or an overly “processed” message is unlikely to be well received.
If your presentation does not gloss over any material problems, demonstrates a well thought out strategy, a realistic assessment of threats and opportunities, an awareness of shareholder value and showcases a proactive management team then you should be on your way to building a better informed and hopefully supportive shareholder base.
Andrew Beal, Aziz Executive coach and mentor
Prior to leaving the City to take up a career in coaching, Andrew held a 28-year career as an equity analyst and fund manager. He’s taken part in thousands of investor meetings as an existing or potential shareholder and as a representative of a listed company. What follows is an experienced investor’s view of some of the ingredients for a successful roadshow.