IR Challenges & Solutions

Excellence in investor relations communications demonstrates a commitment to transparency and disclosure and promotes detailed understanding of the company's opportunities, challenges and solutions. An absence of such skills creates an image of apathy, indifference, or ignorance. Many companies lack the resources to create an investor relations approach that can adequately represent their company to interested constituents: shareholders, customers, their community, and employees. By focusing on top quality communications, companies can represent a face to the world that educates the listener and explains and contextualizes the inevitable peaks and valleys of the company's performance.

When Meetings Go Wrong

There are a host of reasons why meetings can go wrong: temperament, timing, the topic; or perhaps a sign of dissatisfaction, frustration or irritation by one of the parties. The most common cause, however, is lack of preparedness.

Given the importance of shareholders to a company, it is surprising how any IR team members (and I include CFO's and CEO's in this) could ever run the risk of being caught out by a surprising question in an investor meeting. But it happens; a lot.

Granted, everyone is busy, there are not enough hours in the day, and larger companies in particular are complex and difficult, at times, to explain. But there is no excuse. Your core shareholders provide capital and support for management's objectives and in return are entitled to expect information and explanations on demand.

Why Should Companies Care?

Investors have a choice of markets and corporate investments. Companies that elect to emphasize their commitment to clear, comprehensive communication can reasonably expect to benefit when markets are strong, and to be resilient when times are hard.

That resilience is a holy grail for investors: when markets are running higher, most managers are expected to do well. When markets are weak, the managers that can outperform are hugely valuable, and holdings that are well-known and well-understood form the corner stone of such successful portfolios.

Valor will help you to...

Consider your investors carefully:

Tailor your message depending on the state of the market and the relative attractiveness of your story.

Calibrate your efforts:

Try harder when times are tough. Investors trust IROs who communicate more during business cycle lows.

Select and emphasize the most important elements of your business:

Focus on the important segments of your company and maximize your communication opportunity.

Solutions in Investor Relations

Valor IR Consulting provides solutions for a variety of concerns in the investment community. Below you can find the company's core beliefs, goals, and problems that Valor IR Consulting helps solve.

Communications in a Shifting Landscape

Corporate executives and their IR Officers must constantly adapt their message to stay relevant. Just as financial performance is seldom static, the environment in which companies operate is constantly changing, raising new challenges that must be recognized, dealt with, and communicated. Excellence in IR communications requires a focus on changes in corporate governance, market regulations, and other shifts in the investment landscape, in addition to expert articulation of corporate results. Anticipating and meeting those challenges head-on and addressing their implications ahead of impact raises confidence and trust in the management team.

Challenges Include...
  • Rising shareholder activism
  • Migration of sell side analysts to the buy side
  • Greater emphasis on short term investing
  • Instant news from multiple sources
  • Growth in passive investing at the expense of active management
  • Focus on ESG and SRI by plan sponsors

Keys to Success

  • In any endeavor, understanding your audience is the key component of successful communication.

  • Those who fail to accurately understand the needs & wishes of their audience run the risk of supplying the wrong message, or an incomplete, confusing answer to an important question.

  • Companies possess a wealth of data - selecting the most important information and metrics for written and face-to-face presentations is essential for relevant and successful contact with your investors.

  • Developing a repeatable, systematic approach to all IR contact with investors makes preparation more efficient, the output more professional, and allows more time to be spent preparing for inevitable variables.

  • Valor IR Consulting offers company-specific guidance for reports, road-shows, and all communications with the institutional investment community.

Real World Examples

A product harms customers in several markets. Media attention damages the company's reputation and leads to customer boycotts.

How can the company rescue the situation, regain the trust of its customers and minimize the financial damage?
Full disclosure of the issue, including where the company is at fault, if at all. Aggressively and publicly deal with problem with constant communication to the edit and the general public.

Earnings fall below expectations due to unanticipated problems at an overseas facility. Missed guidance harms management credibility.

Investors lose faith in operational expertise at the company.
Fully articulate the reasons behind the shortfall. Elaborate on what is under the company's control and what is not. Explain the long-term potential for recovery, write-backs and other measures, if available.

An activist investor takes a large position in the under-performing stock. Media have yet to pick up on the situation.

Is the company "in play"? What are the intentions of the activist? Is company management under threat?
Have a senior executive contact the activist to assess their intentions. Prepare responses to any direct or indirect demands, to be used in the media. Contact major investors and discuss the activist's approach and the corporate response.
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Contact Information

Communication is a two-way affair. If you contact me, I will respond as soon as possible to your needs. I appreciate your interest and will respond in kind.