6 Steps for New CFOs to Create a Streamlined IR Platform

6 Steps for New CFOs for a Streamlined IR Platform

Photo Courtesy of TaxCredits on Flickr

Rob Swystun, Pristine Advisers

Congratulations on your new position as Chief Financial Officer.

Now you get to be in charge of the really fun stuff, like making sure your company’s Investor Relations function is running like the proverbial well-oiled machine (but a really cool machine like a Ferrari, not a lawn tractor). To do this, here are six steps to ensure successful IR in your company.

Know your shareholders. Knowing your shareholders means researching their investment styles and ascertaining (at least to the best of your ability) why they bought shares in the company and what might cause them to sell those shares.

Take note of the investor concentration in your shareholder base and try to identify if they are weighted toward a growth, value or income investment style, as this can offer insight into what they expect the company to achieve in the short or long term.

And try to find out whether your shareholders include known activist firms among them and, if so, what will cause them to initiate a proxy fight (not to be confused with the infinitely more fun food fight).

Put speaking with your shareholders at or near the top of your priority list and then make a point of meeting with them within the first few quarters that you are CFO. Everybody will want to meet the new person. You might also consider having an investor perception audit performed.

Review your company’s disclosure policy and if it doesn’t have one, create one. A comprehensive disclosure policy is a must for a company when communicating with investors and potential investors. And as the new CFO, it is imperative that you familiarize yourself with the ins and outs of this policy and update it accordingly. If the processes outlined in the policy are several years old, it is quite likely that they’ve changed, even if the document itself hasn’t. This is a good time to make sure they match each other and that the policy document can be used as a reference the way it was intended to be. Are the corporate spokespeople listed in the policy still appropriate? Have there been extra lines of communication added since the policy was drawn up, like a company Twitter or Facebook account or a blog? You’ll want to make sure that every disclosure outlet is covered in the policy.

And, as the subheading so helpfully points out, if your company doesn’t have such a policy, you should create one.

Develop an IR Plan. Developing an IR plan will give you some direction for your investor relations. The first step is determining your plan’s goals. The goal can’t just come out of the blue, though. It should relate to the actual IR needs of the company, whether that be the need to diversify the shareholder base, the need for greater sell-side coverage or a need for improved credibility.

Once you have the goals set, you can then develop your plan with an eye to achieving those goals via your company’s messaging, investor targeting and outreach initiatives.

When you schedule your investor meetings for the year, do so by determining which covering investment bank would be best to connect you with investors in a given geographical area. You will also want to do a couple of company-sponsored roadshows to introduce the company to potential sell-side analysts and additional targeted investors. Determine which conferences would be best for you to attend and solicit invitations to those conferences.

Develop investor positioning. Your IR plan, in addition to being developed to reach its goals, should also contain the company’s IR message — the messaging you use to describe your company and its performance — and that message should be centered around your company’s investment thesis and long-term business model.

Remember that your investment communications should all be answering the question of why investors should buy your company’s stock. Therefore, your investment thesis should be specific, financially focussed, and convey the company’s value to investors. Avoid vague statements and instead be specific. Things like market share potential and your company’s ability to reinvest cash for value creation will speak a lot more to potential investors than saying it has a “strong management team” or that it’s “positioned for growth.” (For all you aspiring fiction writers out there, this is known as the “show, don’t tell” technique.)

Review your company’s IR website and if it doesn’t have one, create one. Have you ever seen a website that has been created and then never been updated or refreshed in several years? They’re pitiful looking things and seeing one is akin to seeing an old floral print couch in an otherwise modern looking abode. Yes, websites, like everything else, need to be updated and redesigned once in a while lest they get stale. And since you’re new, you might as well have a gander at your company’s IR website and make sure it’s not one of those floral print couches.

Even worse than an outdated looking site is one that contains inaccuracies, as these sites are one of the primary places where investors go to seek information. So, above all else, you’ll want to make sure the site at least has the correct information on it.

Investors will also expect to see certain things on your IR site, like a comprehensive FAQ section, quarterly reports, presentations (preferably videos or slideshows) and maybe even conference call transcripts to peruse. You might also maintain a blog on there and have an RSS feed for people to subscribe to.

If you’re updating or establishing your website, it’s a good idea to keep tablet users in mind.

And chances are that your company already has a presence on Facebook and Twitter, but if not, now would be a good time to set that up or review your accounts on those social media networks to ensure what is being communicated fits in with your overall IR plan. SlideShare is also another useful site for businesses to share presentations.

Have a plan for news releases. A steady stream of news about your company will help build awareness, enhance credibility and create buying opportunities for potential investors. Avoid sending out fluff, though. A news release with some some meat to it should be sent down the pipeline every few weeks to keep a company on investors’ radars. Your IR or PR person will be able to help you determine a strategy for news releases with them.

Well, now that you’ve gone through these six steps, you’re well on your way to a bright future in your CFO position and your company’s IR strategy should be humming along like that proverbial well-oiled machine. (No, not the lawn tractor. Why do you always picture the lawn tractor?)


3 responses to “6 Steps for New CFOs to Create a Streamlined IR Platform

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