The hard work doesn’t stop after your company has gone public. A proactive IR strategy is a must in order to foster long-term analyst and investor relationships.
After the months and months of diligent research, planning, and work you’ve spent preparing for your IPO, it can feel all too easy to just sit back and wait for sustained growth. It’s true that congratulations are in order — done correctly, transforming a private company into a public enterprise can be a fulfilling and profitable journey, and it’s often even a crowning achievement. But once the IPO is over, a whole new bevy of challenges awaits, and preparation is key.
As PR Newswire explains, the post-IPO stage is where the “‘real work’ of being a public company actually begins”. Immediately following an IPO, share prices are likely to remain stable, thanks to the increased press coverage and a general interest in IPOs. But without a carefully implemented IR strategy, interest (and subsequently, trading volume and share prices) can wane.
The added challenge of increased public scrutiny make setting realistic financial expectations while maintaining a positive growth message all the more difficult. New stakeholders assume their expectations will be met, and they want financial transparency.
It is therefore essential to develop an IR program that attracts the right mix of investors and long-term involvement, such as equity research analyst coverage. Doing so necessitates an open and active dialogue with expertly crafted messaging, particularly to address investor concerns (which, according to an EY report, are cash flow management and compliance and regulatory risk).
A Proactive Strategy
This is where being proactive with IR can make the most difference. Even a single negative news report can heavily influence share prices, so knowing how to manage that coverage will help mitigate potential damage. This includes engaging shareholders on less traditional channels of communication, like social media and mobile apps.
In fact, utilizing social media may be even more effective than typical methods of disclosure — a University of Illinois study found that when CEOs use Twitter to deliver bad financial news, investors are more trusting and willing to invest than when the news is delivered through traditional channels. Moreover, they provide an added platform from which you can outline your corporate governance system, demonstrating precisely how you will comply with the multitude of new regulations, legislations, and filings facing your now-public company.
Mobile, in particular, should play a central role in any IR strategy, but especially for a company that just finished its IPO. The fact that almost 200 million people in the United States (and two billion around the world) own a smartphone makes mobile devices an invaluable tool in reaching more potential stakeholders in more effective ways.
Smartphones and tablets naturally facilitate regular engagement and transparency. Updates on everything from earnings reports to press releases can be shared in real-time with potential and existing investors, who in turn can ask any questions without delay, no matter where they are. Such communication is made even easier with apps like ShareholderApp that use push notifications to proactively alert all investors to any important developments. This lets your new shareholders know you take them — and their investment — seriously.