Organizing an investor roadshow is no easy feat. Companies are encouraged to go on regular roadshows to build up trust with the investment community. Hence, it is imperative that investor relations officers do everything it takes to ensure the effectiveness of the whole event. Having been part of over 20 investor roadshows in 2019, I have gathered some know-how and tips that could contribute to overall roadshow effectiveness.
- Craft an investment story
The three key words to remember are clarity, consistency and focus.
It is paramount that key messages supporting the investment case are clear and consistent. These key messages should be embedded within the company’s materials and form the backbone of presentations, the corporate website and annual reports, and be reinforced via concrete examples during the meetings.
- Shareholder identification and targeting
For companies, whether big or small, care should be taken to use senior management’s time as efficiently as possible. Effective investor targeting can really add value to investor relations as it helps the company build a balanced register of long-term, supportive investors. Companies need to be acutely aware of the type of investors they want to meet and who will be beneficial to the shareholder register. They may have to reject any potentially inappropriate meetings.
Smaller companies may choose to outsource this process to an independent roadshow organizer. It is handy to have a target of potential investors that the company would like to meet, and to keep track of the proportion of these investors that the company has met in the last 12 months.
- Understand the investor’s profile
Management needs to understand the investor’s style and be fully briefed before the meeting on what they should be saying and the likely questions that will be asked. Some examples of information that would be useful for roadshow preparations include a fund’s investment mandate and investment holding period, and examples of past investments made into the same space.
- Frame the session
Every investor meeting should begin with a purpose and end with a clear indication of the investor’s interest in the company (whether to invest or not). Take the opportunity to introduce yourself and your role in the company, as well as to ask some direct questions to the investors – for example, how familiar they are with your sector. In my experience, the most productive meetings begin with a good company introduction and engaging storytelling by the management team to demonstrate the business’ growth. Always make sure to end the meeting with feedback from the investors and set a timeline for follow up.
- Be aware of non-verbal communication and cultural nuances
Throughout the meeting, the presenting executive ought to make an active effort to take notice of the investor’s body language and the type of questions that are being asked. While it is essential to prepare sufficiently before each meeting, at times there may be unexpected additions or impromptu meetings to attend to. Hence, it serves well to be able to understand body language and facial expressions. This will help in tailoring the pitch according to how the investor responds and hopefully lead to a favorable outcome.
Another point that is often overlooked is the cultural nuances in business, especially when the roadshow is held across multiple countries. While I am not trying to stereotype, meetings in Asian locations like Singapore, Hong Kong and Japan do tend to be different from meetings in Western countries. Building trust tends to be more relationship-based rather than task-based. Asians are also more comfortable with silence and will not feel uncomfortable if the conversation stops for as long as 30 seconds. Finally, attitudes to risk and uncertainty can differ widely from one culture to another and can strongly influence the way questions are being posed.
- Be flexible
On a roadshow, it is a fact that there may be last-minute changes due to unforeseen events. For instance, it could be a change in meeting location or a shift in meeting time. It may seem disruptive to the entire meeting schedule but do not dismiss the need to reschedule the meeting or discuss over a conference call separately. It can prove to be beneficial if the roadshow schedule was planned with the foresight to accommodate such unforeseen changes, for example having sufficient time to travel between meetings or scheduling an extra day on location to potentially fit in new meetings.
Often, the roadshow schedule does not fill up until the week beforehand. Investors get multiple meeting offers coming across their tables and they may not like to lock down meetings too far in advance.
- Follow up promptly and do not be myopic
Conducting roadshows is an ongoing process. It is unlikely that the decision to invest is made within the first meeting, but an impression – whether good or bad – is certainly key to that investment decision. IROs should not dismiss the importance of a follow-up call or thank you note either, as it could aid in the process of gathering feedback on the meeting.
Zaggie Ng is an investor relations associate at Spark Plus
