Don’t Forget a Chair for IR
As the end of summer draws near, and the year-end push begins, don’t forget to include IR in strategic planning discussions.
We often hear Investment Relations Officers (IROs) are not invited to the table. Major mistake. IROs are your frontline offense and backline defense. At their core, they are relationship builders— interacting with external stakeholders, shareholders, analysts, and portfolio managers. To be of real value, they should weigh in on the company’s long-term strategy, ESG, executive pay and other topics. Rather than simply explaining strategy, IROs need to lay out in great detail why the company’s strategy is best positioned to create long-term value or growth thereby, maintaining and attracting shareholders.
Many investor relations professionals eventually move into a strategic development or a CFO role. Just as the CFO’s role over the last decade has shifted from oversight of capital to an influencer of business strategy aligned with an efficient capital allocation strategy, the roles of IROs must change as well, to meet the demands of today’s increasingly sophisticated investor. This means IROs must not only be great communicators but financially savvy, to articulate a clear and cogent strategy rationale.
The ability to break down strategy while talking to investors and a sell-side analysts has never been more crucial than today, as a potential recession looms. IROs can gain first-hand intelligence about how the markets might perceive a specific change in business strategy or product development. IROs are early warning systems, gauging inside street sentiment. This type of real time feedback is invaluable, considering the steep fees consultants charge.
While IROs typically plan for reporting season and non-deal roadshows—even fundraising efforts, management teams that need to raise cash are often unaware of the deep relationships IR teams have with active fund-raising banks. Use those relationships to your benefit. At the same time, add a line to the contract that stipulates the bank not only agrees to raise funds but provide several days of non-deal related marketing.
