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.