I talk to many companies about investor perception research. Why do it? Is it worth it? Anyone can do an investor perception study….or can they? Let’s spend 3 minutes diving into a very misunderstood strategic tool.
Creating the highest sustainable valuation must be a primary goal of every investor relations team. A perception research project done the right way can be a huge contributor to that goal. Conversely, done the wrong way it can be an expensive waste of money and resources. It is my strong view that any perception study must have the full support of the board and the management team. This is not an exercise to simply measure the impact of investor relations. It is a strategic project to identify specific areas of misalignment between the board, management, IR, and the investment community with specific actions to improve them. Misalignment is a value destroyer.
The best management and IR teams that I have seen embrace perception research as an important tool to create certainty about how to improve and enhance their communication and ultimately their valuation.
What if it makes me look bad? How can a detailed roadmap to better communication and valuation make one look bad? The right perception research project enhances the reputation and impact of investor relations, both internally and externally.
The key of course is defining what the right perception research project looks like. It is a pointless exercise unless you have defined goals in mind and understand how you are going to leverage the results. Perception research done well is a dynamic tool to drive a well-thought-out investor relations strategy. That means working backwards from where you want to be. Are you planning a capital markets day? Do you want to re-work your investment thesis and presentation? Does the board need better information about how investors view the company? Has there been a management change and a desire to understand how best to communicate with the investment community?
Be very wary of boilerplate perception studies conducted by anyone. The provider needs to understand the company, the sell-side views, the broader goals of the board and management and how IR intends to extract maximum value from the project. Sometimes I find myself discouraging potential clients from a project given uncertainty about any of the above. There is a time and place for perception research and done well, it is an invaluable tool for IR, the management, and the board. Let’s discuss when it makes sense for you.
John Parker
Managing Partner
+447500896767
