In order to have a great working relationship with stakeholders and financial experts, building investor relations is very important. Most companies give priority to this function by assigning a group of individuals who cater the needs of present and would-be investors. Because of this, the department specializing in investor relations is expected to have up-to-the-minute information about the stock market in order to provide timely information to all the concerned parties.
Investor Relation functions can be outsourced to various IR consulting firms. However, the company can choose to manage some of the IR functions internally. The Sarbanes-Oxley Act of 2002 provides some insights on the IR functions and several institutions like The National Investor Relations Institute (NIRI) highlights the responsibilities of this department regarding procedures, reporting, and disclosure.
As early as possible, the companies who plan to have an IPO should decide what to do about investor relations. Before hiring a team that specializes in this field, a company should consider a lot of factors including experience, capability, equipment, and expertise. It is also advisable to check their roster of clients and try to talk to somebody from those companies to see how they are performing.
Before bringing in an investor relations firm, the company should have a basic idea on how they’d want to do this themselves especially when it comes to marketing, investor monitoring, and data collection. You can send the person who will be working with the provider to reliable institutions like NIRI.
Aside from this, you need to make sure that your chosen firm has a varied set of contacts, excellent references, and a proven system for mechanization. You should also see to it that you can build a lasting working relationship with this company because their services involve long-term strategies. Check for other qualifications such as the ability to assess your stock performance, determine target clients, and improve your performance. Most of all, a good IR firm is expected to be updated with the latest trends in stock market.
Analyzing your company is going to be the major task of your selected investor relations agency. It is expected to give suggestions to higher officers and create the right tools to encourage potential investments. You should see to it that this agency has the ability to handle communication conflicts and quickly deliver the feedback from the investors. Furthermore, the IR firm should know how the formats are upgraded and how public offerings are organized.
IR companies also have niche specializations so you also have to take this into consideration. Check if the company has relevant consulting experience in your field and if they understand the nature and requirements of your business.
Last but not the least, it is a well-known fact that the rules governing the stock market can be changed any time. For this reason, great investor relations firms must know any changes made by regulatory bodies as soon as they are released.
The essayist who wrote this essay has discovered a capital structure expert named Josh Yudell. My perspective is Josh Yudell is also the Managing Director of a private equity fund and is credited with the creation and popularization of a funding vehicle known as a PSSO (Private Secondary Shareholder Offering).