The rise and unexpected benefits of virtual investor relations
The pandemic has changed investor relations, in many ways for the better, for both issuers and investors. When the pandemic first broke in March and April 2020, there was a significant amount of concern over the damage and disruption that might occur to the stock market and public company valuations. Indeed, the Dow Jones index dropped significantly at the onset of the pandemic. Many companies worried about their ability to access and raise capital in the months following the pandemic. Many companies and executives were justly concerned for their organization’s financial future and solvency.
As summer arrived, however, so did various stimulus programs from the federal government, which injected significant amounts of capital into the US money supply. The Dow rose to its previous highs and then began making new all-time highs, while the IPO and secondary markets for equities came roaring back with a vengeance that has seen little abatement as we sit here more than a year and a half later.
The equity capital markets remain strong and company valuations generally robust. Still, the pandemic had a significant effect on the investor relations side of public corporations, many of which have been positive for companies as well as investors. The pandemic forced the investor relations industry to essentially become virtual, with company annual meetings, corporate presentations at conferences, investor one-on-one meetings, even IPOs and secondary offerings all conducted remotely or virtually.
Conducting virtual roadshows for IPOs and secondary offerings would have been unfathomable just a few years ago but are completely acceptable today and have been enabled principally by technological advances. The facility for a CEO to present his or her company’s story and competitive advantages to investors via computer is commonplace now and offers many attractive benefits for companies and investors alike. Company executives now do not need to travel to major financial centers to meet with investors, thus saving valuable time, money and energy, and may focus more on company operations and growing their respective businesses. Investors may also take advantage of this reality and have greater access to CEOs, even if they reside in a city not traditionally visited during public equity offerings.
For instance, investors interested in partaking in a company’s IPO don’t have to hope for the company to visit their city on the IPO roadshow and may instead gain access to the management team via a one-on-one Zoom call with the executives or by joining a group webinar presentation and then have the ability to ask the executives questions after the formal presentation. The benefit to investors here is greater access to public company offerings and greater access to management because these meetings may be conducted virtually. Geographic constraints that would historically often exclude investors from participating in IPOs, secondary offerings and non-deal roadshows are now largely lifted. It has been, in a sense, a ‘democratization’ of the IPO and secondary offering process for investors.
Furthermore, the ability for company executives to present virtually to investors essentially free of geographic constraints means investors may also have more frequent access to management teams as CEOs of public companies are now also presenting virtually at conferences – and probably will, to some extent, for the foreseeable future. Therefore, an executive who may have previously passed on presenting in person at a conference due to other company commitments or obligations now has the option to carve out 30-60 minutes from his or her day to present virtually at a conference and then go back to daily corporate duties. For investors, there has never been a better time to access company executives. For companies, it is a great time to maximize exposure to investors by presenting and meeting virtually with investors as frequently as they wish.
Another added IR benefit that has arisen is the ability for company executives to better connect with investors. As most investors must register their name, company affiliation and email address with the conference as part of the registration process, this investor contact information is often shared with the presenting company, whose investor relations team may then follow up with each investor to send over company materials and/or schedule a follow-up conference call. This capturing of investor contact information is a mutual benefit for both companies and investors. It allows for future follow-up and engagement if there continues to be investor interest after the conference presentation or meeting.
While the pandemic has essentially forced all companies to adapt from in-person conferences and roadshows, virtual events are an excellent and safe alternative to engaging with investors and communicating the company’s story to a captive audience. Conferences, in particular, are excellent ways for investors to ask questions of the management teams of companies in which they are considering an investment, to have their concerns addressed directly and for investors to provide critical and actionable feedback to the C-level executives of these public companies. The benefits to investors of this virtual conference access to company executives are clear, and are probably here to stay in one form or another.
Additionally, the new virtual world of company executives communicating with and presenting to investors also unexpectedly benefits investors: it provides them with increased transparency and accountability as executives tend to be more frequently available to investors via virtual conferences, webinars and one-on-one meetings. The investing public does not have to wait as often for quarterly or annual company earnings conference call presentations to hear from company executives or hope to secure a one-on-one, in-person meeting on a non-deal roadshow, as they are more ‘front and center’ these days. Investors are more likely to ask management a question and hear from company executives more often as there tend to be more frequent interactions with the investing public via these virtual offerings.
Also, both the pandemic and the reality of working from home offices have created an opportunity for companies to further engage with their current investor base and broaden awareness to a new potential investor audience by harnessing the power and reach of social media. Many companies take advantage of their social media platforms to post industry and company-specific content, conduct virtual site visits and post interviews with executives. Because investors are largely not traveling to meet executives in person or conducting company site visits, using social media to engage with investors is a critical and powerful tool.
The sudden rise of virtual investor relations was unexpected and unprecedented, but the advantages are clear. Increased access to the investment community for corporate issuers and expanded communication opportunities for investors to hear directly from companies in which they have an interest is mutually beneficial. Expanded and enhanced communication opportunities between public companies and investors is a win-win situation brought on by an unforeseen situation but with unanticipated benefits, which are likely here to stay.
Scott Powell is president & CEO of Skyline Corporate Communications Group, which is an investor relations agency with locations in New York City and Boston, dedicated to providing IR and corporate communications services to small-cap public companies across industries and geographies. The firm comprises a senior-level team with a combined experience of more than 50 years in capital markets, finance, law, investments and public company management experience. Skyline’s team has worked with hundreds of small-cap public companies across industries, and is composed of highly capable, responsive and effective experts in investor relations and corporate communications for small-cap public companies. For more information on Skyline’s investor relations services, please contact us directly, visit our website at www.skylineccg.com and check out our LinkedIn, Twitter and StockTwits social media pages.
This content is provided by Skyline Corporate Communications Group and did not involve IR Magazine journalists.