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Strategic Investor Relations for Technology Companies

Two-Pronged IR Market Intel

Two pronged IR intel_thinkstock

You’re a CEO or CFO at a publicly traded or pre-IPO technology company.  Wouldn’t it be great to have insightful intelligence into what’s happening in your space?

The analyst pay-for-play variety may help you attract customers.  But what about a service that performs fundamental market research to help you finely tune your IR strategy and messaging without regard to levels of investment or personal relationships with key analysts?

You get valuable, personalized intel on how you are lining up with expectations and against competitors based on more objective criteria.  Everything from how your peer group performs during quarterly earnings season to how their product set and messaging are evolving.  From key metrics that resonate with analysts and investors to M&A and financing activity in your space and key officer turnover at competitors.

Imagine if all this intel came from your investor relations – and was included with your IR services.

What’s Driving Your Stock and Valuation?

And what about intel into what’s driving your stock price and valuation?  Wouldn’t it be good to know what type of investors you’re attracting – or repelling – and why?  Or to have insights into an activist’s motives and interests, and how to deal with one if they become involved in your stock.

Here’s an example.  One of the spaces I covered as a software analyst was network and application performance monitoring and management.  In a matter of three years, the space was consolidated to the point where private equity became the largest player.  The catalyst was an activist holder – often the same one – who saw the fundamental potential and value in the space.

Wouldn’t you want to know this?

How about having insights into who’s active in your stock?  And how to build a more stable, longer-term oriented shareholder base?  Not from conflicted Wall Street analysts, sales traders or bankers.  They usually don’t know, or have moved on to the next deal.

Instead, you get this information from investor relations too.  Your trusted IR team leverages deep capital markets experience and investment community relations to monitor your share price behavior – both absolute and relative to your peer group.

And this intel is also included in with your IR services.

How Do You Get Wall Street to Get You?

Demographics, regulations and technology are fundamentally changing the investment industry – and the research function in particular.  Shrinking commissions and heightened regulatory scrutiny yield lower returns on investment, continuing a cycle of reducing research resources.

Fewer portfolio managers and analysts are doing long-term fundamental research.  They are reluctant to take a longer-term approach because they fear that underperformance for more than a quarter or two will result in client withdrawals.

The buy-side remains heavily dependent on the sell-side for sector and company-specific research and corporate access.  This is despite the fact that most buy-siders complain about the quality, independence and cost/value of that research.  And new regulations in Europe suggest that buy-siders will cut back significantly on their research sources if they have to pay cash for them.

Meanwhile, as true fundamental research has evaporated, the sell-side analyst function has been reduced to three principle tasks:

  • Providing institutional clients access to management of mid- to large cap companies via conferences or road shows;
  • Handicapping quarterly results with low-value data of limited validity or veracity; and,
  • Covering the firm’s underwriting clients, stirring questions of conflict and bias.

So amid all this change, how do you get Wall Street to get you?

The New Investor Relations

Technology markets keep converging.  Apps and services evolve into platforms – increasingly in the cloud.  User experience is becoming as strategic as database.  Security moves from prevention to incident detection and response.  Analytics is becoming the lubricant of decision-making.  And IoT emerges as a new frontier in the digital economy.

What’s your vision of this future?  Your company’s place in it?  Your role in shaping it?

Consider our two-pronged market intel value proposition.  Let us synthesize and translate your vision, strategy, portfolio and market opportunity into a strategic value message that supports your “story”.

We’re the only tech-centric IR firm that does active research into your market trends.  We write white papers.  Some are sponsored because of our thought leadership and credibility in the space.  Most we write for ourselves to gain domain expertise and a deeper understanding of your business.

We combine that with our capital markets understanding to give you a true 360 by correlating what’s happening in your space with what’s happening with your space in the capital markets.  Clients benefit from this research in multiple ways.

Sure we perform all the IR functions – from writing and governance to analyst recruiting and investor targeting.  But because of our two-pronged marked intel, we’re best at honing your strategic value message and getting you in front of the right analysts and investors.

And in IR, that’s where the rubber meets the road.

Credit: Thinkstock

This article first appeared on LinkedInPulse.

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