Investor Targeting Dating
Investor targeting is one of the most frustrating tasks in investor relations. We all know the impact that MIFID2 has had on the sell-side institutional sales and research platforms. Try as they may, and to no fault of their own, the sell-side can no longer deliver comprehensive investor targeting. The stock exchanges offer targeting but without the differentiation needed given their lack of buy-side connectivity. Some financial communications firms purport to offer investor targeting but I’ve yet to hear of many success stories. Independent IR advisory firms offer targeting but are generally based on simplistic peer analysis. There are a few firms focused primarily on targeting with some interesting and advanced algorithms that are worth a look. There is too much, “swipe left” in investor targeting.
So, how does one really go about executing an effective investor targeting program? Forgive the analogy but, in my view, it is not unlike dating in the 21st century. (I only know this from observing how the younger generation seeks out partners/relationships via data apps!). Like dating apps, investor targeting can be like shooting fish in a barrel. Plenty of targets so just fire away. Not the greatest strategy.
The information super highway gives us the ability to screen counterparties (dates or investors) in great detail prior to engaging. Naturally, one would think, this should improve our chances of success. Why doesn’t it work in investor targeting? Because it takes patience and persistence. Many investors will not invest until meeting with a company 2 or 3 times. This means investor relations HAS to create a connection and ‘relationship’ to smooth the path for the CEO/CFO to close the deal. Meaningful relationships don’t happen after one meeting/date (typically!).
An effective investor targeting program involves advanced screening and pre-assessment followed by a commitment and an investment in time to build that relationship. An old adage that still holds true: there are 3 reasons someone buys from you. The product, the company and the person. What most don’t realise is that the most important is the person, then the company, then the product. Investor relations controls the first two. Management and the board controls the last.
Choose the right targets, build the personal relationships, educate them about the company and then worry about the valuation metrics. If they trust you, believe in your foundation, they will find a way to make your valuation work in their portfolio (swipe right!). Just like dating.
Reach out if you want to discuss how you can enhance your investor targeting to drive higher sustainable share prices.
John
John Parker
+447500896767
