It should be obvious.
To keep and gain happy and loyal investors, you need to cultivate healthy, active relationships and open communication. But all too often, many public companies can lose sight of this if they aren’t careful.
There are many ways, however, to keep relations healthy and thriving, and to continue growing a solid shareholder base.
One of the best ways that your company could accomplish this is through non-deal roadshows.
What Is a Non-Deal Roadshow?
In a non-deal roadshow (NDRS), nothing is for sale.
Rather, it is a very important opportunity to discuss and develop interest in what will be coming up for sale in an upcoming IPO or in what an investor has already purchased and is continuing to “risk” funds on.
It introduces the concepts of the company that is nearing IPO, and/or provides information and generates interest from potential investors and analysts. It often goes over details like the year’s earnings report, new developments, plans for expansion, etc.
How Non-Deal Roadshows Work
The financial manager responsible for running the road show will travel to predetermined locations throughout the country over a given period of time. Most are managed by brokers or underwriters working with the company that is preparing for IPO. It is not uncommon for at least a couple of the company’s executives to travel along with the broker.
The roadshow events can be large-scale, multi-media presentations that attract and accommodate hundreds of interested potential buyers, or they could be small, private meetings with select executives and investors.
They can incorporate question/answer sessions with the officers of the company that is going public, or may just be a presentation. Some even offer online roadshows.
They can also be (and usually are) a mix of all of the above.
What Will Be Discussed in a Non-Deal Roadshow?
A variety of topics will be covered in non-deal roadshows. Essentially, whatever will be of greatest interest to potential buyers and that will create a sense of promise and stability.
- Earnings report
- Company history
- Future plans for development
- Current assets
- The potential of the initial share prices
- Major challenges/concerns posed by marketplace skeptics
It is after the roadshow, during which time the broker can gain insight into the interest of potential investors and a more reliable estimate of how well and for what price the shares will go, that a prospectus is created and an IPO date is set for companies who are working toward going public.
So What Are the Benefits of Doing a Non-Deal Roadshow?
There are many benefits for doing a non-deal roadshow before your company goes public. In fact, in a 2014 study by EY, it was concluded that 82% of institutional investors in IPOs considered non-deal roadshows a major nonfinancial factor in determining where to buy.
Here are just 6 of what we consider to be the top benefits to your company when you put on non-deal roadshows:
1) Keep everyone up to date: one of the benefits of having a NDRS is to announce your year’s earnings and keep everyone up to date. As such, it is always a good idea to plan an NDRS right after your earnings report.
NDRS, especially when held after your earnings report, allows those in Wall Street as well as analysts, current shareholders, and potential investors know how your company is doing.
It is an opportunity to instill confidence to encourage shareholders to keep hold of their shares, while prompting potential investors to commit.
2) Keep relationships with investors healthy: by keeping everyone, including current investors, up to date through NDRS, you are ensuring that your relationship with investors and your investor communications stays healthy.
Additionally, besides acting to keep everyone informed on the latest happenings for the company, it also provides the opportunity to allow your current and potential investors to ask questions and voice concerns.
Especially when company officers are present on the roadshow, this goes very far in improving investor relationships.
It should also be noted that your top 10 holders in the company will expect yearly visits from senior management. Scheduling more intimate stops along your NDRS to visit with your top 10 will help not only improve relations but loyalty as well, even when there may be a bit of bad news from the stock market.
3) Recruit new shareholders: you of course always want to be securing and growing your shareholder base. NDRS provide a fantastic opportunity to reach out to high quality potential new investors.
So, when scheduling your NDRS, make sure there is a good mixture of stops visiting with current as well as potential shareholders. Don’t neglect pursuing new investors.
4) Meet valuable investors who don’t attend big conferences: NDRS also provide the opportunity to target quality investors who may have been otherwise missed.
Many long-term minded investors and accounts don’t necessarily participate in investor conferences where they could have previously encountered your company. This does not mean, however, that they would not make excellent, long-term and invaluable contributors to your company.
NDRS allow you to schedule very targeted stops that would provide the opportunity for you to meet these investors and gain their interest.
5) Learn what the word on the street is: converse to the first point, NDRS also provide the opportunity for you to learn what the market at large has to say about your company. You will have many opportunities to get feedback from analysts and buy-siders about how they perceive the face of your company, as well as what they hear about your company from others.
This is a valuable opportunity for you to get a “pulse” on how your company is perceived and how it is doing out on the Street. This information can then be turned and applied to improve how you present your company and execute communications.
6) Gain valuable feedback on the effectiveness of your story: the biggest thing that you will be doing on an NDRS is telling your company’s story over and over again. The goal: gain the interest and trust of potential investors so that they will be willing to take a risk to invest in your company, providing it the capital it needs to execute its mission.
Like all marketing, the quality of the story-telling (or lack of quality) will significantly impact how winsome and successful you are at acquiring new investors and keeping current shareholders happy.
NDRS, then, allow great opportunity for you to get feedback about how well your story telling is working and whether you need to adjust your approach. Buy-side analysts are especially forthcoming with their opinions and recommendations about how you could improve your method.
Use this feedback to continuously adjust and perfect your story for future audiences.
Think Your Company Needs a NDRS?
If your life science company is needing to improve its investor relations, is getting ready to go public, or is just ready to see growth and develop a more thriving investor communications and relations plan, contact us today!