Dec 10
12
How to Select the Right Investor Relations Company
Investor relations is a strategic management function whose goal is to build long-term relationships with the company stakeholders and other members of the financial community. In most companies, it is a department that handles the inquiries of current and potential investors, and provides support for the chief financial officer in decision making. The Investor Relations department must be updated with the changing trends in the stock market and should act as watch dog in order to provide reliable information to upper management.
Investor Relation functions can be outsourced to various IR consulting firms. However, the company can choose to manage some of the IR functions internally. The Sarbanes-Oxley Act of 2002 provides some insights on the IR functions and several institutions like The National Investor Relations Institute (NIRI) highlights the responsibilities of this department regarding procedures, reporting, and disclosure.
Companies going for Initial Public Offerings should decide early on how to handle Investor Relations as it is needed during and after the offerings. If a company is going to hire an investor relations firm, it must keep in mind the various factors such as industry relevant experience, infrastructure, tools to be used, goodwill, ability to deal with financial media, training, and the renowned experts in the panel.
But before interviewing or making a deal with the investor relations company, there should already be a developed strategy on marketing, tracking of investors’ perception, communication, and information gathering. Various institutes such as NIRI offer courses to upgrade your skills about developing a sound strategy to deal with the financial community.
Look for an investor relations firm which can offer a wide selection of contacts, reliable references and a stable system for mechanization. Since you cannot just switch IR agencies overnight, you should make sure that your chosen IR agency can engage in a long-term commitment. Ideally, they should be able to analyze your performance, deal with your target stakeholders, and provide great insight on how to take your brand to the next level. Above all, make sure that you are dealing with an investor relations firm that is not behind the times.
Your chosen investor relations firm will serve as a third-party team of experts that will evaluate the performance of your company. Among their many functions is to provide advice to top management, formulate press releases, manage investor conferences and presentations. Make sure that this firm can deal with negative press, crisis communication, and assist when it comes to SEC disclosure.
IR companies also have niche specializations so you also have to take this into consideration. Check if the company has relevant consulting experience in your field and if they understand the nature and requirements of your business.
Last but not the least, it is a well-known fact that the rules governing the stock market can be changed any time. For this reason, great investor relations firms must know any changes made by regulatory bodies as soon as they are released.
The contributor of this article has discovered a corporate finance expert named Josh Yudell. My perspective is Josh Yudell is also the Managing Director of a private equity fund and is credited with the creation and popularization of a funding vehicle known as a PSSO (Private Secondary Shareholder Offering).
