Service Providers

Reviewing Your Company’s Communication Policy

When was the last time your board reviewed the company’s communication policy? When the company needs to communicate information, whether internally or externally, who handles it? Do you have a process in place to ensure that your message is clear and that it reaches its intended audience? What about shareholder, stakeholder or media inquiries, is there a designated person who responds to such inquiries and does everyone in the company know what to do if they are approached for a comment about your company or the services that you provide?

As a board, company communications can be a tricky subject to oversee, particularly in today’s technologically advanced world where things can be disseminated in an instant. When you have good news to report or are promoting an exciting event, it seems much easier to maintain control of the message and find a welcoming, receptive audience. But when you need to communicate a difficult message to shareholders, stakeholders or the public this is when you will really benefit from having a communication policy with a well-defined process in place. Following are some of the key items for your board to consider when developing or reviewing your communication policy:

  • Who the policy applies to – i.e. officers, directors, employees and consultants
  • Who will draft, implement and periodically review the policy for effectiveness?
  • Who will be responsible for preparing the communication? Will it be done by an individual or by a pre-determined committee? Are there any particular circumstances when the responsibility may change?
  • How will the information be disseminated, via a newswire service, an internal communication list/newsletter/blog or other method?
  • Who will be designated to respond to inquiries?
  • Will the communication policy include electronic communication such as email and social media or will that require a separate policy?

A communication policy is important for all companies. It helps to build a strong, consistent image both internally and externally and is critical in protecting your reputation. If your board hasn’t adopted or reviewed the communication policy lately you may want to suggest that it be added to the next agenda for discussion.

This story was written by Canaglobe Compliance Solutions and featured in Service Providers magazine.

Service Providers

The Benefits of Cross-Trading in the United States

For many Canadian companies, the successful listing of their security represents an important milestone.  It’s a sign of recognition, prestige and success, demonstrating to the market a desire to be open and transparent.  There are many reasons why a company may choose to list its shares – to raise capital, increase its valuation and diversify its shareholder base.  But many companies are unaware that there are limitations as to what can be achieved by solely listing in Canada.   They may not be cognizant of the fact that many U.S. investors are unwilling or unable to invest in foreign markets, and that the information they make available locally may not be widely-available to U.S investors.  So, what is the best way to bridge this gap and access the world’s largest market for capital expansion and growth? Cross-trading.

There are numerous benefits to Cross-Trading in the U.S:

  • Diversifying your shareholder base
  • Making your financial information, research, pricing, and risk assessment more broadly available to U.S. investors
  • Appealing to those investors who prefer securities traded domestically ($USD)
  • Enhancing visibility among broker dealers by supporting broker and sell-side compliance

A national exchange, such as NYSE or Nasdaq, may be perceived to be the natural home and fit for most foreign issuers looking to access a deep pool of institutional investors. However, foreign issuers, such as those in Canada, are subject to U.S. exchange requirements and different accounting standards that can become duplicative, time-consuming and cost-prohibitive for global IROs with limited budgets. On the contrary, cross-trading on the OTC Market allows a company to leverage its existing reporting standards to make its disclosure available in the U.S. The simplified requirements to trade OTC remove duplication, are less-resource intensive and require fewer expensive experts.  This secondary trading solution helps to remove trading restrictions and complements the company’s home market reporting process.  In turn, a company improves its ability to maximize shareholder value, achieve better visibility and a fair valuation in the U.S. public market, while increasing the effectiveness of its investor relations program.

Cross-trading also presents both Canada and the US with reciprocal opportunities for issuers to enhance market liquidity, creating additional investing opportunities in a company’s home market and abroad.  Providing a cost-effective trading environment in which to raise capital and build global investor awareness.

In addition to cross-trading, OTC Markets Group Inc. and the Canadian Securities Exchange (CSE) recently developed a first-of-its-kind North American capital formation and visibility solution for start-ups looking to go public.  This alliance offers issuers the benefits of the IPO listing on the CSE, combined with secondary trading on OTC Markets’ OTCQX Best Market/OTCQB Venture Market.  This affords investors and the broker dealer community greater access to a breadth of financial information, increased global investing opportunities and more efficient trading of international issuers shares.  Simple processes and fixed fee structures remove many of the barriers of cost, time and complexity typically associated with going public on an exchange.  Helping companies bridge the gap and expand their footprint– paving the way for capital expansion and growth.

This story was written by OTC Markets Group and featured in Service Providers magazine.

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Top 10 Tips to Improve News Releases for your CSE Listed Company

Global consumption of news is at an all-time high. Our digital lives keep us constantly connected and fed with a steady diet of emails, shares, tweets and more. The result is that people actually have less time to read than ever before.

So, how do you create news releases that will get the attention of an overstimulated audience?

Here are 10 tips to help your company’s news stand out:

  1. Focus on the headline
    • Include your company name and an action item.
    • The headline is your best chance to make a statement and to capture the reader’s attention. Use the opportunity to make an impression.
  2. Keep it concise
    • Many will not read beyond your headline and first paragraph, make your point early and get the important details across promptly.
    • Less is more in an era where the average person is overwhelmed with content.
  3. Use multimedia
    • A picture/map/chart/video will increase viewership of a news release and provide a visual representation of the message.
  4. Include a quote
  • Readers’ eyes are naturally drawn to the first quote.
  • A quote adds a human element to the news and provides great content for journalists.
  1. Link back to your website
    • Your news release shouldn’t explain every detail. A link will encourage readers to visit your site for more information.
  2. Use social media
    • Your investors are using social media and you should as well.
    • “Like,” “Share,” “Re-Tweet” your own releases and encourage other to do it too.
  3. Stay active
    • A news release should be issued at least once per quarter. This helps you to maintain momentum, build a historical timeline of announcements and keep your story relevant.
  4. Build and maintain your own contact list
    • Allow investors and potential investors to subscribe to your mailing list.
    • Collect contacts within your industry – media, analysts, bloggers.
    • Include the list on your news distribution.
  5. Think like a “skimmer”
    • Let’s face it, your readers are scanning through your news release (a natural consequence of our time-starved society) – so create your news release for the eyes of a skimmer.
    • Let readers quickly find what they’re looking for and catch their attention by using the tips in this list.
  6. Use a reputable newswire
  • Although you can promote your own story, nothing takes the place of a trusted newswire.
  • In a world of “fake news,” an emphasis on authentication will only grow stronger.

You are one among thousands of public companies in North America, all competing for the attention of enthusiastic, research-driven investors. If a news release is your best tool for marketing your company, consider your audience’s perspective, reading habits and research needs. Implement these 10 tips. And then enjoy an increase in reader feedback; an increase in awareness of your company; and an increase in your confidence that your news releases are effectively promoting your message.

Author:

Ian Tennant
Director
Newsfile Corp.
www.newsfilecorp.com

This story was written by Ian Tennant and featured in Service Providers magazine.

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A Solution to Getting to Know Your Shareholders

Reality Check: How Well Do You Know Your Shareholders?

No, really — how well?

Most public companies suffer from a lack of information that is typically found in small private companies. Small private companies experience the support of friends and family, small family offices or even venture capital firms that speculate on their behalf. Actually, public companies don’t operate much differently. They, too, experience the support of friends, family and seed investors. The difference is that one day the IPO lures a company in to go public.

The “Problem” with Going Public

It begins when bankers, institutions and small funds lead the way in offering your company to go public. Some stay for a while and some are small gain-focused funds or institutions that are out on day one, making their money on the run up of the IPO. The end result: You’re left with hundreds, if not thousands, of shareholders. You have no clue who they are, what they represent, what their expectations are and, again, who they are.

I call them “boosters.” Boosters are a group of very intelligent, well-connected individuals that operate under the acronym “IRO” as a consultant and/or firm and want to help your company find new shareholders. It’s their job to make introductions to people in their networks. If you do well in presenting your story and delivering and your guidance is on target, you will find shareholders. Rinse and repeat with non-deal-road-show investor conferences and inbound interest. Before you know it, you’ve gone from 25 friends and family investors and one local fund in your network to more than 3,000 shareholders, some of which own up to 10 percent of the company. Then it hits you: You don’t know who these people are, who knows whom and if this even affects your company.

The Solution: Shareholder ID

It’s absolutely essential to the success of your public company that once a year you conduct a sound shareholder identification analysis. If you have sustained volume and people coming in and out of the story and people accumulating more and more, then you should consider hiring a firm to help manage this for each quarter. First, a robust Shareholder ID program will identify street positons in variant forms, objecting beneficial holders (OBO) and non-objecting beneficial holders (NOBO). Then, the program will identify the registered positions analysis to see if firms and individuals show up on both lists. A robust Shareholder ID program will not only highlight the brokers and banks that hold ownership, but also the underlying shareholder(s), and if that shareholder is party to another firm or group who also owns shares in your company. This is where activists come in; this is where share voting is greatly improved; and this is where real relationships are formed.

Every shareholder has a price horizon; it’s important you know this, for many reasons. One, you should understand how much time you invest in getting to know them, what else they invest in, whom they know, where they went to school and what they model your business out to be. The more you get to know your shareholder, the more you will understand these things. The more you understand these things, the quicker you can step up the shareholder base.

The more you get to know your shareholder, the more you will understand these things.

The more you understand these things, the quicker you can step up the shareholder base.

I’m a realist, and I enter a relationship with a shareholder knowing that if she/he makes a decision to purchase some shares in my company in the open market, most likely she/he will be my friend for a short period of time. This works. I don’t want a marriage — I have one. What I do want is to make them money, plain and simple. And I do that by executing my strategy, communicating my message and delivering. No disrespect intended when I say to any shareholder, either individual or firm/institution, that I want to sell when they’re ready and move on to the next one, to build a relationship with a new one, and repeat this process again. Every now and then, however, you find fans, regardless if they are high net worth people or firms, that love your business, your industry and you. They become the glue of your shareholder base, and they are rare. You might not even know who they really are.  Do you want your company’s biggest fans to be a stranger to you and your management team? I think not!

Do you want your company’s biggest fans to be a stranger to you and your management team?

Over the past 10 years, I have met hundreds of CEOs that don’t know their shareholders, don’t understand the mechanics of their shareholder base, and refuse to invest the time or resources in learning it. By contrast, I have met a very small percentage of C-level executives who get this simple exercise and have the best shareholder bases I have ever seen.

Ask your IRO, your outsourced IR firm or even your transfer or annual meeting management company for help. If they can’t do this for you, they should refer you to a trusted company that can.

This story was written by ACCESSWIRE and featured in Service Providers magazine.

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6 Steps to Maximize Your Social Media Presence

The media landscape has been completely changed with the impact of technology. Currently, it is incumbent upon companies and organizations to create their own media. Social media is a popular channel for private companies to reach a larger audience – Facebook, Twitter, LinkedIn, Instagram, Snapchat, FourSquare, you name it. Gone are the days where companies compete for top spots in yellow pages or paying massive premiums for radio ads.

The situation is a lot more complex for publicly traded companies that are heavily regulated. However, with meticulous and proper planning, your public companies can benefit massively from the wide exposure gained from advertising on various social media platforms. Specifically, LinkedIn and Twitter are two platforms that are usually very popular and well received by shareholders and investors of public companies. Depending on the industry, Facebook and Instagram can be very helpful as well, especially for companies that have a lot of B2C business.

Facebook alone accounts for one in every six minutes spent on the internet. One in every five minutes spent on smartphones are also attributed to Facebook. Close to half of all college graduates are LinkedIn users. Over 45% of all adults who make more than $75,000 annually are on LinkedIn. Over 88% of businesses with more than 100 employees use Twitter for communication, marketing and advertising.

Here is a six-step process we have derived for maximize your social media efforts.

Step 1: Research

Find out who are talking about your company, and how. Are there any misconceptions of your business model? Are employees sharing information on the world wide web?

Always remember a cohesive social media plan should be very comprehensive. Setup alerts that track the online mentions of your company and your key executives. You will quickly find out about what people say about your company on the internet.

Step 2: Establish a Basic Presence

Make sure you secure your company’s accounts on all the major social media platforms. This is a great opportunity for your company to have a positive brand presence on the internet when people search for your name.

Step 3: Develop a Plan

Once you understand how social media can integrate with your business, you can develop a plan to achieve your objectives, and figure out how that would connect with your overall business goals. The conversation online will go on either you participate or not. Hence, if your plan is to simply continue to monitor the internet, you should at least create a social media policy.

Step 4: Engagement

If you decide to be proactive in managing your social media, you will need to figure out how much of an engagement level would you like to upkeep. While social media can be a great channel to keep your investors and key partners updated between earnings announcements, it is not necessarily worthy of an official press release. You can use your social media platforms to share press release headlines, key messages from your earnings calls, answer questions, publish white papers and offer seminars.

Step 5: Integration

Integrate your social media platforms with your digital investor relations platform (website). The website should be a hub of information that is detailed and useful. Provide regular updates of content on the site, and push the content to your social media accounts. The more your investors visit your website (also via your social media platforms), the more they will think of your website as the first source of information. Inform website visitors which social media platforms your company is active on.

Step 6: Measurement

The real value of social media programs can be measured with several metrics, gauging its progress. Many Software-as-a-Service platforms provide subscribers with analytical packages, which help you establish a baseline, target audience, and follow social media user trends over time.

Should you have any questions or if you are interested in Uptick’s Social Media Program, please do not hesitate to contact Terry Tremaine at: 604-202-7841 or [email protected]

This story was written by Uptick Media and featured in Service Providers magazine.

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Can New Technology Complicate Your Marketing Process?

It can be difficult to navigate modern marketing technology and take advantage of all the good things it brings to your business.

Don’t underestimate the importance of staying current and knowledgeable.

You need to know how to overcome the complications to your marketing process that new channels and tech can bring.

New technology like marketing automation helped Dropbox to increase its signups by 60 percent. This took old marketing strategy, customer referrals, and did it in a new way for the era of the millennial.

Do you want to know how to navigate these new waters and ramp up your digital marketing strategy?

Let’s get into it.

Blogging as Part of the Marketing Process

Starting a successful blog isn’t easy, but it’s worth it for the results.

Companies that blog more often get four times more traffic as those who blog less frequently, so it’s a marketing tool that can’t be ignored.

Companies don’t know what subjects to blog about, often misunderstanding what customers find interesting. A customer-centred approach is key here.

Avoid narcissism by doing topics that don’t just promote your products, but add value to readers. And don’t forget to blog more regularly so your customers always have new topics to peruse on your site.

Chatbots Are the Future

Chatbots are a new and exciting game-changer. They mean real-time consumer engagement and are a great tool for your business to be accessible and responsive.

The problem here is that not many people understand how to take advantage of them.

The vital tool to use your chatbot effectively is more information. Common customer queries should be the building blocks for scripts that you feed the bot.

For example, if you own an e-commerce site, lots of inquiries will be about shipping times and rates. This is all simple information that you already have.

Creating Interesting Content

The challenge with content is to continually create it in such a way that seems fresh and original to readers.

Common mistakes include repeating topics, especially if there is staff turnover and the employee who created the content leaves, or is guilty of publishing content that isn’t relevant or current.

This can be solved in a few ways, but the top method is to tune into social media.

Investigate what your customers are saying and mould your content around that. Create a conversation and interact with them by asking questions on posts to find out about their wants and needs.

Automate Your Marketing Process

There are a few hacks (or tips) when it comes to automation in marketing, but use the method Dropbox did if you want to imitate their success.

Use automation to reduce your cost per acquisition by providing a strong incentive and making it as easy as clicking a button to send a referral.

Bonus: the bond between your brand and your customer is made stronger with every referral and reward given.

Steve McNeill is a partner and marketing strategist with Q4 Communications, which has an innovative lead generation process called WebInsight.

This story was written by Steve McNeill and featured in Service Providers magazine.

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Going Public? Put a Communications Upgrade Near the Top of Your To-do List

Congratulations on taking your company public on the Canadian Securities Exchange.  You have made a wise decision that will benefit you, your team and your company in many ways.

With your new status, however, comes responsibility to an expanded base of shareholders and a duty to maximize the value of your company in a manner different than when you were private.  Now, the value of your organization is reassessed by the investment community every second of the business day.

Build it and they will come?  Don’t believe it for a moment.  There are thousands of listed companies in North America vying for the attention of the investors you seek, and the companies that attract them are the ones who combine business success with marketing savvy to ensure they are at the front of the line when investors scout around for ideas.

Unless you know every shareholder in your company and have a good portion of the financial community in your digital rolodex, you will need assistance with communications.

How much assistance?  A typical IR budget for a microcap stock is in the range of $100,000 per year.  This includes travel to meet investors and investment professionals, participation in a handful of carefully chosen events, digital outreach to keep the story live 24 hours a day, and perhaps an external IR firm to bring an instant base of interested parties.  If you are sufficiently mature as a corporation, an internal IR manager might be a consideration.  And…we’re already closing in on $200,000.

A lot of money, right?  Well, if a $200,000 outlay adds to your market capitalization by $3 million (6 cents per share assuming 50 million shares outstanding), few will argue the money was not well spent.  Especially if you plan to raise equity capital anytime soon.

Add in satisfied investors and better sleep at night, and it really is a prudent decision.

You’ll need people you can trust to guide you in putting your strategy together.  There are plenty of hands who will take your money – ask around to make sure you team up with the ones who follow through with the promised effort.  And while a company needs to be connecting with existing and prospective shareholders regularly, only spend money on a full suite of resources when you have the corporate developments to really leverage them.

A prevented sell has the same value as a buy.  Inform your existing shareholders with regular written updates, media interviews, and an increasingly popular tool — video.  Complement important press releases with a brief video explaining your latest results, how your process works, or what your new facility looks like inside.  Let shareholders look the CEO in the eye online and take his or her measure.

A favorite related story involves a company whose stock was stuck between $0.50 and $0.80.  Management put tremendous effort into investor relations, but no matter how hard they tried they could not break through $0.80.

One day, on meeting number 200+, the company met an analyst who got the story right away and encouraged their trading desk to begin buying the stock in size.

It was not long before the stock broke through $0.80…on its way to more than $3.00.

The point is that if you have a good company, there are investors out there who will see what you see, adopt your vision and back you with money.  But connecting with them is a numbers game.  Reach out to a few dozen people and you will have to be very lucky to find backers.  Reach out to a thousand and your odds can start to look pretty good.

This story was written by Peter Murray  and featured in Service Providers magazine.

 

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5 PowerPoint Tips

5 PowerPoint Tips: 

We’re seeing somewhat of a rally in the markets with most sectors experiencing upward movement.  Analysts we interview are quite bullish on the markets and this bodes well for the micro cap executives pitching their stories to investors.  This leads me to the topic this month:  creating the best presentation.

For you savvy IROs and CEOs, PowerPoint hasn’t changed much in the past decade, but it seems many executives are getting it wrong. At a recent trade show, I sat in on several presentations and was shocked at how dismal most them were. This plight led me to create 5 PowerPoint Tips on building a strong presentation.

Tip #1: HOOK: Author Sam Horn shared something with me that we implemented in our client branding and it’s been infinitely helpful. She called it “The Eyebrow Test”. If what I say to you doesn’t make you lean in and raise your eyebrows, then I’ve lost you. If you’re confused, you’re not buying. Test your pitch using this method.

Tip #2: VISUAL: Use 1-2 pictures or a video snippet to illustrate your business. A picture is worth a thousand words, and according to Forrester Research, one minute of video is worth 1.8 million words.

Tip #3: 10, 20, 30 RULE: Popular blogger, Guy Kawaski presents a very valid case when he vocalized this rule. Because most of your presentations are to investors, you’ll want to be concise, clear and avoid industry verbiage. There’s a reason why journalists write for a grade 6 level – it’s simple to understand and share. This is the goal. 10 slides with the following topics:

  1. Problem
  2. Your solution
  3. Business model
  4. Underlying magic/technology
  5. Marketing and sales
  6. Competition
  7. Team
  8. Projections and milestones
  9. Status and timeline
  10. Summary and call to action

Tip #4: 10, 20, 30 RULE continued: You should speak no more than 20 minutes, or 2 minutes a slide. This leaves you ample time for questions and further explanations regarding your technology, geology, biology, etc. If you’re slated to speak for only 10 minutes, then trim your slides to 1 minute each or combine a few of them.

Tip #5: 10, 20, 30 RULE continued again: This refers to your font – it should be no smaller than 30 point font! This forces you to choose words that are more efficient and eliminate fluff and technical jargon that so often appears in presentations.  I couldn’t read most of the font at that tradeshow, and I was positioned in the middle of the room.  And I’ve had laser eye surgery.

Remember, clarity and brevity are beautiful. We often use our Office Manager for our litmus test when creating TV spots for clients. If she raises her eyebrows and leans in, then we know we’ve got her. If she’s furrowing her brows, then we go back to the drawing board. It’s that simple.  Good luck with your next presentation; I hope you make it powerful.

Taylor Thoen is CEO of BTV-Business Television.  BTV is passionate about succinctly sharing issuer stories on BNN and Bloomberg US.    www.b-tv.com

This story was written by Taylor Thoen and featured in Service Providers magazine.

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Are You Protected Against Cyber Security Attacks?

No one thinks it’s going to be them. Until it is.

According to the movies, cybercriminals operate out of abandoned warehouses, target carefully selected conglomerates and use things like “worms” and “keys” to gain access. The reality, however, is that cybercriminals, using scattergun techniques like phishing, are not out for world domination but rather a more familiar motive: money.

In 2016, 24% of breaches targeted financial organizations, 15% healthcare, 12% public sector entities and 15% targeted retail and accommodations*. Whether it’s design plans, medical records or good, old-fashioned payment card details—someone, somewhere will see it as their meal ticket.

Organizations need to build a strong security posture by implementing strategies that address internal and external threats across the entire chain. It is critical to start from the premise that systems will be breached. This perspective enhances the effectiveness of decision making related to preventing, mitigating and recovering from a breach.

Another recent development makes this a pressing imperative. Canada’s new Digital Privacy Act has introduced mandatory breach notification.  In 2017organizations will be required to notify the Office of the Privacy Commissioner, as well as the individuals affected, if the organization experiences the loss or theft of personal identifiable information that puts these people at “real risk of significant harm.” Failing to do so could result in fines of up to $100,000 per offence. This comes as part The Digital Privacy Act (formerly referred to as Bill S-4) that was put into effect in June 2015.

 

On January 19, 2017, the Canadian Securities Administrators (CSA) published Multilateral Staff Notice 11-332, stating that they expect issuers to provide risk disclosure that is as detailed and entity specific as possible, should they determine that a cyber security risk is a material risk. In order to determine materiality, the cyber security incident requires analyzing and the probability of a breach occurring and the anticipated magnitude of its effect needs to be determined. The CSA expects issuers to disclose specific risks, rather than generic risks common to all issuers, and they expect issuers to tailor their disclosure of cyber security risks to the particular circumstance. Underestimating risks leaves enterprises highly vulnerable. Poor security can lead to painful, even catastrophic, financial and reputational losses. Moreover, data breaches and other security incidents put not just individual companies, but entire supply chains, at risk. The following are three steps to build a robust security posture that will support the goals and resilience of your organization, and assist you in determining your cyber security risk.

  1. Conduct a health check of your organization’s cyber security maturity.

A health check is an assessment of an organization’s controls, security risks and threats, to define its current security posture and highlight gaps.

The health check assesses current risks to your industry and business and evaluates the strengths and weaknesses of your organization’s existing security controls.

The health check determines the impact a breach could have on your organization: operations, productivity, information assets, infrastructure, reputation, materiality of the cyber security risks and brand.

  1. Develop a clear security roadmap.

The health check will guide an organization by providing a clear map of priority risks and practical direction regarding where to most effectively focus cyber security budget and resources.

  1. Test your organization’s vulnerability to cyber-attack.

It’s essential to supplement planning with robust testing to determine your organization’s vulnerability to cyber breaches. Intellectual property, personal information, plant systems, computer servers, and mobile devices, could all be targets for attacks.

Seek objective, trusted third party cyber security expertise to assess potential weaknesses through vulnerability assessments and penetration testing of your internal and external networks and applications.

Without adequate protection, cyber security threats can put your organizations’ operations, reputation – even its existence – at risk. Vigilant assessment, planning and testing are critical to protect the bottom line.

For more information on how you can better protect your business from cyber-attacks, contact:

Danny Timmins, CISSP, National Cyber Security Leader T: 905.607.9777E: [email protected]

About MNP

MNP is a leading national accounting, tax and business consulting firm in Canada. We proudly serve and respond to the needs of our clients in the public, private and not-for-profit sectors. Through partner-led engagements, we provide a collaborative, cost-effective approach to doing business and personalized strategies to help organizations succeed across the country and around the world.

This story was written by MNP  and featured in Service Providers magazine.

 

 

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All Research is Paid For

Since 2003, Fundamental Research Corp, has covered over 280 public, and 120 private companies under an issuer paid model.

It is our belief that research has always been ultimately issuer paid.  What we mean by this is that research is a cost center for brokerage firms.  While trading commissions the research generates contributes to the cost, by and large, many firms make the bulk of their money collecting fees from issuers doing financings, and part of these fees pay for research.

If an analyst has a negative rating, or target price on a company below what a firm is raising money at, the money does not get raised and the firm collects no fees.

We believe that by charging issuers directly for coverage, the transaction is more transparent, and collecting the fee upfront, allows the analyst to be independent.

Traditional models of research are becoming even more difficult since the introduction of MIFID II in Europe.  The impact of this is that institutional investors must now pay hard dollars for research as opposed to getting it for free in exchange for placing traders with the research provider.  The exception to this issuer paid research.

The impact of the above is that smaller cap firms generally do not get coverage, and things are only going to get worse.  Even when they do get coverage, the number of investors who will have access to the report is limited to the brokerage firm’s clients.

Academic studies have shown that research is the best way to get information about a company to investors.

Fundamental Research Corp solves the problems mentioned above by directly charging issuers a fee for coverage, and getting that research into as many investors’ hands as possible through our global distribution network.  To learn more about how coverage will benefit your firm, visit us at www.researchfrc.com.

This story was written by Brian Tang and featured in Service Providers magazine.