From seed financing to listing and growth: An ever-evolving IR program
Few IR professionals have witnessed the very early stages of a companyís progress up to the listing stage and further on to the dual-listing stage. We remember the QSSP (Quebec Stock Savings Plan) years when companies were financed at an early stage with tax incentives that were very attractive for individual investors: Videotron and Alimentation Couche-Tard in the mid-80ís, to name two of the most successful.
In the early 90ís, the Quebec Government offered generous subsidies to the Health Sciences sector for discovery research and venture capital funds also strongly contributed to the growth of that sector. A handful of companies that were nurtured then are still around and have acquired many smaller companies without changing their corporate names and brands. The majority of companies, however, became takeover targets at some time in their corporate life.
What we have come to realize is how the IR program, an ever-evolving component intimately linked to corporate strategy, acts as a catalyst and support to the growth and development of a company. As such, it needs not only to be elaborated over a forward 12 to 18-month horizon in order to capture corporate events, but it must also take into account many variables that characterize the company: its development stage and market capitalization, the number of staff and consultants involved in communications, the size of its IR budget, the complexity of its financials, its markets and business opportunities. This ensures the building of an effective and value-added IR program, customized to meet the companyís real needs.
A company which has just become publicly listed will want to build its credibility and increase its visibility by adopting best disclosure practices, acquiring communication tools, obtaining analyst research coverage and developing relationships with investment banks. It should also attend selected small-cap conferences, organize meetings with potential investors, nurture shareholder relations, and if time and budget allows, perform some retail activities to increase stock liquidity. Basic disclosure tools and practices will include a solid corporate presentation, a website with a section dedicated to investors, concise press releases on material information, conference calls and webcasts. Briefing management on timely disclosure and best behaviours to adopt in front of potential stakeholders is an ongoing process. At that stage, as at any development stage, targeting the right investors is essential to getting maximum traction during conferences, corporate events, roadshows and group meetings; it also ensures that managementís time, money and efforts are not wasted. Getting regular feedback from investors will warrant alignment of the message and provide an evaluation of the IR programís effectiveness.
Looking outside the company, carefully crafted peer group analysis of private and public companies alike, small-cap to large-cap, provides key intelligence to management. As a company develops, action items such as building an extensive retail IR program, integrating PR and media communications, as well as expanding institutional efforts outside its national market, will be added in due course to its ever-evolving IR program.
In light of the current financial and economic environment, these programs should be reinforced, rather than discontinued or delayed. For a company to weather the storm as well as possible, it needs more than ever to ensure that management maintains continuous communications with its stakeholders.
Nicole Blanchard, B.Sc., B.Comm. is managing partner of Sun International Communications, a consultancy firm specialized in strategic financial communications and investor relations.
Julie M. Thibodeau, B.Sc., MBA is an IR professional with a solid expertise in finance and management.
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