When you talk about investor relations, you refer to a department or a third-party firm that handles the finance, marketing, security laws, and communications of a certain organization. Investor relations provide a fantastic way to communicate between constituencies, the financial community and the company. They also handle any inquiries of investors and shareholders, as well as those interested in making investments in the company.
You may be thinking that you have to set up an entire new department for this, but that’s not entirely true. Some companies choose to hire a third-party provider to represent their company for them instead of doing it in-house. What can these firms do for you? For one thing, these companies will be able to help in setting up conferences and investor assemblies. Aside from this, they are also the ones who disseminate information about the different policies on the company’s corporate social responsibility. Due to the changes in technology, this can actually be done through an XBRL program.
The investor relations team should always be updated on the latest information about your business. These providers will always be on the lookout for news that they can use to build up goodwill among the stakeholders. They’re just like news companies who are always on the hunt for a good story except that it will be in relation to you and your brand. More than this, they are also responsible for studying stock patterns in order to present current and potential shareholders relevant information about their investment.
These firms also play a role with the company in times of crisis. Issues such as management changes, corporate downsizing, product liabilities or any industrial disasters are usually supervised by investor relations. Even if there is a bear market, your agency should be transparent and should be able to look at some balance sheet strengths, as well as address any issues with investors.
Your selected agency should also talk to the media and be able to face the public if something goes wrong. They should always be ready to prepare a press release or statement for the shareholders and the public, whether the news is good or bad.
Unlike in the past where the function of this team was to take a more promotions and sales approach, their role these days have grown to include activities in the realm of finance, communication, and corporate laws. Investor relations also make sure that the company’s shareholders have a voice in company affairs. They provide avenues where feedback can be given for the overall benefit of the company.
Like in any field, this one also has a best practices. To improve their performance, officers of an investor relations company often consult with other investor relations professionals. Their participation and membership in professional circles such as the Investor Relations Association could also help them gain insight on how to perform better. Avenues for feedback like phone calls and surveys may be necessary so that the members of this arena can give their input on how to improve the service.
At the end of the day, investor relations companies are all about serving their clients, shareholders and investors. They work together to benefit both sides from the investments. Building better client relations can give you a premium on how your investments would grow, and it’s all thanks to a good firm that you can rely on.
Josh Yudell is widely considered to be an expert in the fields of investor relations, SEC compliance, corporate finance and capital structure and is a frequent contributor to blogs and publications, both online and in print.