Over the years, Bristol has met with many companies that shared negative stories about past investor relations experiences which have made them reluctant to work with third party IR agencies. The once bitten, twice shy syndrome. As a result, potential capital market opportunities are being missed due to public market inefficiency and a company’s reluctance to hire effective IR professionals. Valuations, liquidity, and access to better and cheaper capital are all points of impact. We have identified five major causes of some of these poor IR outcomes to help our potential clients navigate the complex world of investor relations.

1. CONDUCT YOUR RESEARCH – Surprisingly, many companies entered agreements with IR firms for the wrong reasons. Often IR firms are recommended by stakeholders that have motives not aligned with a company’s management team. Furthermore, many times and especially when such referrals take place, engagements begin without performing any research or diligence on the IR agency.  The very nature of what the agency has been tasked with or service they will provide is not vetted properly or thoroughly. The reference and diligence into an IR agency is a very necessary step for management, both to understand the general nature of the IR service and to get a better feel for who the company just hired and what to expect. It could be that from a service standpoint it is exactly what the client wants but from a process or personality standpoint, evidence exists that a future issue could arise. Part of a successful IR engagement is finding a firm that can adapt to and work alongside the client’s management team and their style and personalities must mesh.
2. MAKE YOURSELF AVAILABLE – Most micro cap management teams understand their company needs a proactive IR strategy to increase market capitalization. Many of these teams get excited when informed of the potential cities in which quality meetings can be arranged and typically believe at the beginning of the engagement that they are always available to meet potential investors. Yet, there are countless times when management simply shies away from road show marketing. Various reasons reduce the amount of time management thought they would invest into IR. While core business operations should always be the primary focus, management teams at times miss opportunities to meet new potential investors and thus hinder their IR efforts. CEO/CFO/COO or VP of IR should regularly make themselves available for periodic non-deal road show marketing or the investor community will simply loose interest.  
3. NEGOTIATE FLEXIBLE TERMS – Many IR firms charge high fees and operate under long term retainer agreements without giving their clients the ability to review the work being done or to take into consideration changes to the business. Personalities may clash, references may be wrong, the level of service or its desired effect may not match and the expectation from the outset and the IR experience becomes a negative one for a management team and their IR service provider. To solve this dilemma, management should negotiate opt out clauses in their agreements when hiring an IR agency.   
4. QUALITY VS QUANTITY – Road shows are hard! Nothing is worse than taking time away from the office and family, paying for travelling expenses and then having poor quality meetings.  Numbers are not always an indicator of good IR work or quality road shows. Meeting with five or six potential investors in one day and knowing that three of those meetings are irrelevant creates a negative outcome for both the company, the investor, and the IR agency. A management team should vet the process of booking road shows by their service provider to ensure that appropriate meetings are being organized to create a positive and valuable experience.
5. KEEP YOUR EXPECTATIONS IN CHECK & TRACK YOUR GOALS – Realistically, increasing awareness and building investor trust takes time. Professional investors do not usually buy companies immediately after a meeting.  Investors meet new management teams and issuers daily and often it takes months or even quarters before deciding on their level of interest or diligence. Effective proper IR takes time and it is very difficult to take shortcuts in this process. Communication to investors must be done efficiently, effectively and with continual follow up. This is done through telephone interaction, email, press releases, road shows, conferences, research, and other touch points. A good IR firm should be able to report to the client on an ongoing basis on these touch points and their impact. Management should be able to track and measure established goals set at the outset of an engagement. As with many things in the investment community, a big factor is timing. Rome was not built in a day and it takes time to build an effective IR program, and for it to gather momentum.  When hiring an IR agency set realistic expectations, give it an appropriate time period and track the results to see if your goals are being met.

Bad prior experiences should not lead to potential hasty and biased decision making on future IR mandates. Potential capital market opportunities to build value for shareholders exist for most small public companies. By being more thoughtful and engaged with the five factors above, management can eliminate bad experiences and potentially generate considerable value from effective IR engagements.