Management teams regularly ask whether road shows are still necessary. With a zillion things on the to-do list and with the ability to find information about anything on the Internet (hopefully including plenty of good stuff about your company), this is an interesting question.
Here’s the answer.
Of the large number of buy-side and sell-side managers my firm constantly queries, 95 percent consistently rate one-on-one meetings as their preferred method of learning about a company.
Videos and other presentations, regardless of how spectacularly created and edited, just don’t provide the complete picture many investors seek when they’re making an investment decision.
Conferences are valuable since they are a great way to greet large numbers of investors and can provide a consensus of opinion based on open forum questions.
Nevertheless, the vast majority of fund managers don’t want to disclose their thought processes in a group environment; they would rather hold their questions and ideas close to their vests as they develop their investment thesis.
The next question that arises is:
Can I skip hiring an investor relations firm and just allow banks to book my road shows?
This, too, is a valid question.
Even if you don’t hire my company, you still want a competent, phone-working investor relations firm managing your road shows. Why? So you can retain your “date-able” status.
If other banks view you as “married” to a particular firm, they may stop trying to court you.
This could limit your choices for the best long-term relationships for your company. Most bankers place their deals with a handful of funds that consistently step up to the plate to balance their investing portfolio.
You, however, need variety. It remains the spice of life in almost every area.
This is not to say you shouldn’t take advantage of offers by bankers to take you out to their institutional investor base.
However, manage this process by yourself or ask your communications firm to do so. And be prepared to fill in the blanks, because if a non-deal road show is getting booked by a bank, it will suddenly take back seat priority versus any deal road shows that suddenly land on the plate of that investment bank and its institutional salespeople.
Instant financial gratification from a “deal in the hand” will rule, and you might be left with an airline ticket and hotel room in some city…with no dates.
Booking quality road shows is not easy. It is an art form. Most communications firms do this poorly at best or not at all.
Having spent almost 20 years working with a team that consistently books about 6,000 meetings per year, I can say road shows are the loss-leader division at any firm.
They are immensely time-consuming, not to mention stressful.
But they are so important to the success of our clients we will never stop spending the time researching each meeting carefully, playing phone tag, taking hours to educate and qualify the meeting, confirming the date and following up—because fund managers consistently rate these one-on-ones essential to their ultimate investment decision.