Investor Relations (IR), is an integral part of the public affairs or face of the company, focusing on managing relations with current and potential stakeholders and is usually the main point of contact for your shareholders and investors.

Larger firms may have an internal IR team but many companies outsource their IR activities to IR agencies or consultants who are responsible for managing the reputation and brand of the company in a timely, transparent, and trustworthy manner. This helps investors to make well-informed decisions on whether your company is worth investing or not.

Here are the ABCDEs of what a good IR team can do for their clients:

  • Attract interest and capital investment
  • Build up a viable shareholder base
  • Create and grow long-term brand value
  • Diminish overall cost of capital through earned media
  • Earn long-lasting credibility in the investment world.

Let’s take a closer look at the key factors that you should consider before hiring an IR agency. Our top 5 are:

  1. Check out the IR consultants’ area of expertise

    Many consultants are actually Public Relations (PR) consultants rather than IR ones. So what’s the difference? While IR is sometimes a department of and closely related to PR in the sense that they overlap in reputation management and overall brand-building for the company, the objectives and constituencies do have distinct differences. In simple terms, IR is concerned with the investors and the stakeholders who are more directly able to affect or have a more significant say in your business upon investing. PR on the other hand is more about addressing customer and the general public’s needs.

    So the key is to look for agencies with substantial experience or specialisation primarily in the actual field of Investor Relations. Ask them for case-studies or examples of how they have demonstrably improved or helped their current or past clients better engage with their stakeholders. Also, look for agencies with extensive networks within the media and financial analysts, as they will be able to help increase your brand awareness, profile and coverage over time.

  2. Understanding your objectives and goals

    A good IR company understands your company’s business values, finances, strategic and tactical needs, as well as your short and long-term goals. Without this knowledge, they will not be able to get your company in front of your desired audience. This may impact variously on the overall interest in your company, trading volumes, share liquidity, and overall investor sentiment for example. Especially for companies that are relatively smaller in size, it is all the more important that your IR agency is able to profile and consistently generate positive news and interest among the investing and analyst community for you. For example, a good IR agency can help in spotting trends, whether favourable or not, get your company’s spokesperson interviewed or quoted regularly in the media, and provides strategic counsel on potential partnerships, deals and communication to stakeholders.

  3. Quality over quantity

    Many IR firms promise you the sky when you first meet them but then end the relationship with a whimper because they were unable to really assist their clients. See if you can meet the staff who will be assigned to your account. Are they competent, financially-savvy, fast-acting, takes responsibility and with massive amounts of initiative and enthusiasm? Do they come across as people of integrity, transparency, truthfulness? Do you trust them with your brand?

    In short, are they the people you would want on your team?

    An good IR agency should be able to convey concepts and messaging to stakeholders in the language and level that they understand. Making complicated things easy to understand is a skill that not many possess but is highly valued because this allows you to communicate effectively and efficiently, ensuring that key aspects of what you want to get across will hit the target and not be lost in translation.

  4. Handling the challenges of IR

    Keeping a close eye on the fluctuations in the share price of the company should not be the primary concern of the IR agency. Indeed, most of the time, market fluctuations are beyond the control (and scope) of an IR agency because the factors affecting it are many and varied.

    Some of the most challenging aspects for IR agencies are:

    • Ability to work well with the C-suite (CEOs and CFOs) of client companies
    • How to minimise the gap between the management and analysts
    • Coming out on top of a crisis (crisis communication)
    • Getting to grips with ESG issues

    In conclusion, don’t be too quick to decide on a potential partner. Take some time to get to know the IR agency, their knowledge, network, expertise, and a team who will respond in a timely and transparent way and someone you can ultimately trust to provide the best counsel and strategy to take your company forward. It will be time well-invested and pay off in the long term.

    Waterbrooks has been helping our clients position themselves for growth for the last 25 years. Speak to us if you are looking for an agency with a difference!