Best investor relations practice in a downturn

Feb 19, 2016
<p>Downturns come and go but investors have long memories</p>

The key to investor relations in a downturn is to stay in touch with your constituents and keep your message consistent; in many ways, IR best practice in difficult times mirrors IR best practice in general. Here, Jeffrey Goldberger, managing partner at KCSA Strategic Communications, and John Gollifer, general manager of the UK’s IR Society, share their tips for keeping the program on track.

1. Open the kimono
‘Investors are looking to sell, so don’t give them a reason,’ says Goldberger. It might be tempting to hide away if the stock has taken a hit, but it’s essential to remain open, he says: ‘When calls from investors come in, answer them as promptly and as thoroughly as possible.’ And if there’s news to share, share it: while the trend – in Europe at least – might be to move away from quarterly reporting, Goldberger says adding intra-quarter press releases can be a great way of keeping the investment community up to date when necessary.

2. Hit the road
Getting new investors to pick up the stock might be a tricky task in a downturn but that doesn’t mean you can’t get yourself on the radar with potential new investors. Continue with non-deal roadshows, advises Goldberger. ‘Also, take the time to reach out directly to existing investors – face to face or over the phone – to bring them up to speed and to let them know you value them as investors,’ he adds.

And don’t forget your covering analysts: you need them in your corner, and the best way to do that is to keep them up to speed on the business. ‘Arm [analysts] with answers to the questions they’re likely to receive from their institutional clients,’ says Goldberger. ‘Don’t leave them in the dark.’

3. Keep up the two-way flow
It’s easy to slip into a defensive, responsive mode during challenging times but Gollifer stresses how important it is to keep up the two-way flow of information. ‘Stay with that two-way role IR offers,’ he advises. ‘It’s the dialogue or conduit for the company and investment community. It can make all the difference in a downturn.’

4. Take the long view
Companies need to focus on running the business in a downturn and taking control of those aspects of the business – or the IR program – that can be controlled, says Goldberger. ‘Succeed at that and the stock will rebound over the long term,’ he suggests.

Gollifer agrees. ‘Stick with it,’ he advises. ‘[A consistent message] is effectively the same as saying to your investor audience, We know it’s difficult but here’s the investment story, intact and riding through testing times for the long term.’ Show your investors you’re not afraid to discuss the downturn and what it means for your business and investment story because you believe in the message.

5. Seize the opportunity
In IR, challenges can also be opportunities and Gollifer says a downturn can be turned into a chance to reinforce your relationships with the investment community and show it that it’s ‘business as usual’ from an IR perspective.

‘Downturns come and go but investors have long memories,’ he notes. ‘So when better to reinforce this key IR relationship as part of the ongoing IR role?’ Best IR practice in difficult times – when others may be too preoccupied or not thinking clearly – ‘can only add to your credibility as an IRO’.

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