Rising market volatility doesn’t look to be going away anytime soon, with world stocks buffeted by mounting macroeconomic headwinds such as gas-supply disruptions, surging energy prices, the war in eastern Europe and Covid-19 leftovers.
As economic uncertainty reshapes the investment landscape, business leaders need to proactively maintain strong shareholder relations, and IR professionals are there to ensure companies continue to attract investment. But how can IR become the strategic partner company C-suites need?
SpringWorks Therapeutics
That was the topic of discussion during a recent IR Magazine Webinar, where experienced IROs talk about what investor relations professionals can do to become strong C-suite allies.
‘What does a trusted ideal partner look like?’ asked Samantha Sandler, director of IR at SpringWorks Therapeutics. ‘This is a professional who’s responsive, analytically rigorous and accountable for being an extension of management’s voice.’
Speaking at the webinar, Sandler pointed out that inflation and its impact on the company’s cash is ‘top of mind’ for companies – even more so for growing businesses – and therefore long-term liquidity and access to capital were ‘very big considerations’.
‘This is where IR teams can play an essential role in partnering with leadership, finance and sell-side teams to analyze the company’s optimal capital formation, strategy and structure, which can lead to evaluating differentiating pools of capital and cultivating relationships with different industrial ties,’ she explained.
‘In the end, building a clear and concise narrative on strategic capital-allocation decisions and how this contributes to a company’s ability to execute on its value-driving investment becomes a key focus for IR teams.’
Leveraging AI intelligence
Tom Marinaro, vice president of IR business development at AlphaSense, felt IROs should leverage AI as much as possible because providing the C-suite with empirical information is going to play an important role in building a successful strategic partnership.
‘Our clients are describing their strategic partnership with management as one where they can help the executive team avoid any type of blind spot,’ he said.
In practical terms, though, how can IR help management be set up for success? ‘We are going into any conversation in an uncertain time,’ Marinaro continued. ‘We need to have everything at our fingertips regarding what we’ve said in the past compared with how we’re framing it, what our narrative is compared with six to 10 peers in the group and almost ensuring the communication is in line with shareholder expectations.’
Beyond sharing intelligence information, forming strong relationships with the buy side is going to help in more than one way. While solid relationships create stronger engagement with shareholders, they also offer an opportunity for information gathering and for greater insight into investor expectations.
‘Internally, you’re taking that [information] and communicating [it] before any buy-side interaction with your C-suite, so knowing the audience and prepping your C-suite with that [information] is just as important,’ said Marinaro.
Trusted partner
As top-level executives recognize the advantage to be gained through solid relationships across the investor community, they also acknowledge the critical value of IR talent. But macroeconomic factors driving financial volatility mean IR professionals must adapt and think of new ways to help management get through rougher patches.
‘As an IRO, your paramount mandate is to strive to manage uncertainty. This is one of the critical ways you bring value,’ said Sandler.
Her advice around managing uncertainty was to understand that volatility requires identifying an opportunity or challenge, considering near and long-term implications and crafting information for the management team while also managing expectations.
‘You have to remain calm and level-headed, particularly during periods of broader market volatility. This is crucial,’ she said.
‘Each step of this process is data-driven. And behind each of those pieces of information, there is a person who needs to view IR as a trusted partner. So in the end, managing uncertainty goes back to strategic relationship building. Timing is management’s most important asset. And during periods of volatility in particular, the C-suite needs IR on the frontline, collaborating with leaders internally and externally.’
