Four Challenges Even the Most Experienced IRO Might Face in a New Role and How to Navigate Them
For new IROs, the first 90 days on the job are critical for establishing themselves as a reliable and trusted resource for management and investors. Even for the most seasoned IR professional, starting up as IRO for a new company can present a unique set of challenges. Here we review four common obstacles you may encounter when new on the job, and our advice for navigating these with finesse and foresight.
Challenge #1: The IR process you inherited is non-existent or disjointed.
If you are taking over an existing IR program, you will want to assess the program’s strengths and weaknesses, and identify opportunities for improvement. If you are setting up a new program for a pre-IPO company, this checklist is a good starting point, but you should also reference this IPO blog for more specific recommendations.
In conducting a SWOT analysis of your company’s current IR situation, here are a few areas to consider:
- IR plan: Is there an annual IR plan? Does the plan establish clear objectives, short- and long-term goals, and KPIs to measure success? Are there actionable and innovative strategies outlined?
- Messaging audit: Does your company have a clear and compelling investment thesis and value creation strategy? Is this messaging integrated across IR communications, including the IR website, annual disclosures, quarterly earnings, and other IR materials? Is the IR positioning consistent with other corporate messaging?
- Investor communications: Is the IR website current, dynamic, and comprehensive, with strong messaging on the landing page? Can you add an investor presentation, video assets, fact sheet or infographics to remove the friction and heavy lift for an investor or analyst to easily conduct due diligence on your story?
- Shareholder base and investor targeting: What are the risks and opportunities within your shareholder base? Is there a strategy for targeting (the right) new investors? Do you have access to a data platform or third-party resource to support investor targeting and/or CRM?
- Sustainability strategy: Does your company have a clear environmental, social, and governance strategy? How does this compare to peer practices? Are there risks in the company’s ESG scores and institutional shareholder voting history? Who are the key contributors and what is IR’s role?
Challenge #2: Management believes the stock is undervalued.
If your company’s stock is undervalued, one of the first areas to explore is where there may be misalignments with external perceptions and internal expectations. As IRO, you can gain useful insights on perceived strengths and weaknesses of the company as an investment, value creation levers, and what is and isn’t working with investor relations through 1×1 conversations or pulse check surveys with shareholders and covering analysts. But to obtain truly unbiased insights, a full-blown perception audit can be invaluable.
Conducted by a third party, a perception audit can identify and correct potential blind spots that may adversely be affecting equity value and corporate reputation. IROs that have insights and data from perception audits can more effectively gain buy-in on IR program recommendations and changes.
Challenge #3: Your management team’s presentation skills are sub-par.
The strategy is clear. The value creation potential is there. But your management team’s delivery of the story to the Street is weak, resulting in skepticism among investors. You know that in the unforgiving capital markets, impressions are formed in seconds — but delivering constructive feedback to your boss when new on the job can be tricky.
Our advice: 1) Don’t single out one executive. Instead, explain that everyone can benefit from speaker training, and that it would be beneficial for the entire management team to be coached. 2) Introduce a new (or more regimented) prep process to review key messages and role play Q&A to anticipate pitfalls ahead of all IR events. You may benefit by including colleagues like the head of communications as an ally for delivering tough feedback. 3) Bring in the experts for the training. The process requires not only expertise, but the delivery of constructive feedback, which is often more effective (and frankly better for job security) from an outside partner.
Challenge #4: Sell-side coverage is limited.
Let’s face it, obtaining analyst coverage usually comes down to the sell-side being able to make money on trading or investment banking. However, even then, you need to make it as attractive as possible for an analyst to pick up coverage. #1: Make it easy to unpack your story and form an investment thesis. Provide clear and easy-to-access background information on your company’s offerings, the competitive environment, positive and negative market dynamics and trends, and details around your total available market and serviceable addressable market. #2: Make it worth their time. Key to this is providing access to senior management as well as other operational leaders and subject matter experts to help advance the analyst’s due diligence and market their investment thesis to their clients and generate interest in your company’s stock. Can you commit to NDRs and/or conference participation? Can you make management available to present your company to the sales team? Please see our blog on attracting sell-side coverage for more advice.
Every company and every management team is different, and so every investor relations position comes with its own set of IR challenges. Sharon Merrill Advisors helps IROs to navigate those challenges by providing strategic support and high-level counsel based on our decades of diverse IR experience across a wide range of companies. Contact us to find out how we can support your IR efforts.
