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đ§ Investor Relations I: How to Win Investors and Influence Them
A practical approach investor relations


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Keep quiet
âYou know the problem I have with your business?â
âNo, go onâŠâ
This guy was particularly obnoxious, but he was our largest bondholder, so I had to play along.
âYou are too noisy.â
âHow do you mean?â
âThereâs too much going on. A few solid quarters of margin expansion, and then BANG. Something happens. Volumes fall, or margins swing back again. Or you buy a business or sell a business. Thereâs always a surprise around the corner.â
âThis industry is a bit like that. Itâs dynamic. And it is priced into the coupon you get. Thereâs a reason we arenât borrowing from the investment grade market.â
âWell, I donât like it. Keep the market quiet, and youâll keep me quiet.â
It sounded like a threat, but one I didnât understand much. And with that, we were done. Unscathed despite a particularly mediocre quarter. I grabbed a croissant on the way out, as weâd be skipping lunch.
Onto the next meeting, a short walk away. This time with our biggest shareholder:
âYou know whatâs bugging me about the business?â
âWhatâs that?â
âItâs too quiet⊠there isnât enough happening. More product innovation. Disruptive M&A. Something to get our equity value growing faster.â
I laughed.
âWhatâs funny?â
âYouâll never guess what our biggest lender told me less than an hour ago⊠the exact opposite.â
âThatâs bondholders for you. Forget them. As long as they get their coupons paid, and refinanced at the end, thatâs all you owe them. If the bond price wobbles around a bit in the meantime, thatâs their problem, not yours.â
He wasnât wrong.
But the contrast between the two conversations was funny. It was the investor relations challenge in a nutshellâŠ
Picking the right investors is crucial - but so is how you manage them.

This is the first part of a 3-part series on Investor Relations.
How to Win Investors and Influence Them
Today we start a three-week series on Investor Relations, the art and science of communicating with investors.
We will not cover capital structure design, or fundraising in detail. They will be series in their own right. But naturally, there will be some overlap.
The running order:
Today: Overview of Investor Relations
September 14th: Managing equity investors
September 21st: Managing lenders
Letâs get into it.
What is investor relations?
Investor relations is the control of the flow of information between the company and its investors.
OK, but what is investor relations really?
Itâs a sales job. I donât mean the aggressive car dealership-type sales. But real sales. Giving a third party robust information, in the right context, so they can make an informed decision whether to transact or not.
Good investor relations work will shield the rest of the business from the noise that investors bring. Noisy investors are disruptive to the business. And that is bad.
Look at Disney. In April, they fought off their second activist proxy battle in two years. At the time Bob Iger said:
âWith the distracting proxy contest now behind us, weâre eager to focus 100 percent of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumersâ
This is a polite way of saying, âwe havenât been running the business for the past couple of years.â
Meanwhile, in the two years to April 2024, Disneyâs share price fell 20% against an S&P500 increase of 14%. Ouch.
Source: Yahoo! Finance
This doesnât prove cause and effect. The activists got involved in the first place because of poor performance at Disney.
But it does show that once relationships with investors spiral, it can blow through the business like a tornado.
I remember once a hedge fund (a name you would have heard of) took a large short position in our business. It wasnât unusual in itself. But at the same time, all sorts of false (bearish) rumors started to appear in the financial press. Speculation about lost customers, financial difficulties, investor disquiet, etc.
These rumors ended up snowballing into the trade, and, even at one point, mainstream press.
Before I knew it, I had 20 phone calls and more than a hundred emails from concerned employees, customers, suppliers, banks, credit insurers, landlords, etc.
It doesnât take a great leap of imagination to see where those rumors came from, or how they found their way to the press.
You cannot stop the bad actors. But you can influence how your stakeholders respond to news.
Itâs about building trust. And this series is all about how you do that.
Who are the âinvestors?â
Shareholders, banks, bondholders, of course.
But I like the scope of investor relations to be wider than that. It should be anyone who has a material financial interest in your business. Material to either them or to you.
That includes:
Employees (depend on your business for their job, and the value of their stock options)
Major customers (stability of supply)
Major suppliers (giving you credit)
Credit insurers (ditto)
Rating agencies (itâs their job to inform investors)
Pension funds (fund the pension liability)
The reason I like to have these in scope for investor relations is twofold:
They need communication too. It goes without saying how disruptive these stakeholders can be if they get nervous.
Consistency of messaging. Building trust is vital in good IR. You canât do that if different stakeholder groups hear completely different messages.
This doesnât mean itâs your IR team that is communicating with employees or customers. But it does mean IR is driving the content that is used for those stakeholders, when discussing the finances of the business.
You donât want a sales person putting together a half-cocked presentation on the financials of the business for a big customer. Based on âa few things they found on the website.â
Whose job is investor relations?
That depends on the size and nature of the business. Letâs think of it in stages:

Note: the CEO will have an important role to play despite the stage. But for stages 2 & 3 the senior finance head should assume all responsibility for coordinating IR. Weâll return to the role the CEO plays later in the series.
Once companies reach stage 2, they should stay there unless they enter, or plan to enter, the capital markets (i.e. once it has listed equity or debt).
As the investor base becomes more complex, the skills needed to manage IR become more specialist. Specialist IR professionals are worth their weight in gold (qualified treasury pros, or former investment bankers) - but you typically only need them if you are public (or planning to go public soon).
Even a very large business doesnât necessarily need a dedicated investor relations function, if it has a private capital structure. And it expects to stay that way.
Letâs talk about that distinction.
Private markets vs. capital markets
Imagine you have two businesses. They are the same size and work in the same industry. Both companies borrow from the same banks.
Company A is public, meaning anyone, whether institutions or retail investors, can buy its stock.
Company B is private, owned by a few institutions, and its shares are not openly traded.
Company A has to share much more information with the public. This makes the investor relations job for Company A 10x harder than Company B.
Hereâs why:
Company A has to tell its story in public. The rules about what they must share are decided by:
The stock market where their shares are traded, and
Local company law
Here are some things Company A must do (assuming a US listing):
File an annual report in 60, 75, or 90 days, depending on the companyâs size (called a 10-K)
File a quarterly report in 40 or 45 days, depending on the companyâs size (called a 10-Q) (and hold a dreaded earnings call every quarter)
Share big news like lawsuits, material events, or changes in leadership within 4 days (called an 8-K)
Tell everyone when their directors buy or sell shares (Forms 3, 4, and 5)
Share proxy statements before meetings so shareholders can vote on big decisions, including executive compensation details
Disclaimer: this is a simplified overview of U.S. public reporting requirements and is not exhaustive. Nor is it intended as legal or financial advice. For detailed guidance, please consult a professional.
Other countries have similar rules, even if the forms are different.
Company Aâs investor relations (IR) team has a lot more work to do than Company Bâs. Why? Itâs because public companies have three big stakeholder complexities:
More shareholders: Public companies often have many more shareholders, including retail investors. These investors come with different rules and regulations to protect them.
Extra stakeholders: Public companies also have to manage extra stakeholders like rating agencies, equity analysts, and the broader investment community. These groups monitor the companyâs performance and can influence stock prices or credit ratings.
Different reactions from common stakeholders: Even stakeholders that public and private companies have in common, like employees, customers, and suppliers, will react differently. For example, when Company A publicly discloses bad news, these groups will know about it immediately and might panic. But for Company B, which operates privately, many issues can be kept quiet. As the saying goes, "What they don't know won't hurt them."
Because of these complexities, Company A needs a more sophisticated IR team to manage relationships and handle all the public disclosures.
That would also be the case if Company A were privately owned but had publicly listed bonds. The precise disclosures might be different, but the requirements are not much lighter.
Public markets are great for access to a much wider pool of capital, but they come with significant requirements. So think carefully before you file that S1.
But while the requirements are different, the underlying principles for good investor relations are the same for a company of any sizeâŠ
Building trust & credibility
Investor relations are so much easier when your investors believe what you say. That comes from trust and relationships. And that takes time. You need to put some credits in the bank.
You do that, by saying what you are going to do, and then doing it. The more you show yourself and the business to be one that can execute and deliver your promises, the more your promises are worth.
The better your forecasting and FP&A, the easier it is to make credible promises. More on that next week.
The trust you have built pays dividends the day there is some investor concern around your business. Perhaps thereâs a rumor, or performance hasnât been good. If you have built trust with the relationship director at your primary bank, or with a shareholder, you can look them in the eye and tell them why itâs going to be ok.
Or you can look them in the eye and tell them there is a problem, what you are doing about it, and how it will be resolved.
Transparency
Itâs easy to think full transparency is the key to earning trust. This is a fallacy Iâve seen in noobs to investor relations.
The balance of what to share, how to share it, and with whom, is as much art as science. The underlying fact base needs to be the same, but how you tell the story might differ for different stakeholders - based on their interests.
But one key principle - especially when you are working with institutional investors. Once the toothpaste is out of the tube, you canât put it back. So, you must be careful and economic with what you say. Sophisticated investors are shrewd listeners, and are capable of inferring all manner of things from what you say (or donât say).
So building trust without saying too much is the name of the game, and thatâs tough.
With public companies there is the added complexity of Material Non-Public Information (MNPI), which is a minefield. Weâll touch on this a bit next week.
Investor relations contact plan
How do you build those credits?
With great proactive Investor Relations management. That comes down to your contact plan and your systems. This could be simple in a small business with one bank. Or much more complex.
Hereâs a simplified version of the playbook I use:
1) Identify investor relations groups: Define your different IR groups. These are the stakeholders we discussed earlier. Be clear about which stakeholders are in and out of scope and put them in groups determined by their precise interests. For example, you might break your shareholders down between short-term traders holders and long-term holders.
2) Build a contact book: Think of this like a CRM but for investors instead of customers. Excel is enough for most businesses, but you might need something multi-dimensional. This doesnât have to include every shareholder, but it should include every individual institution you want some level of direct contact with.
Remember, this should include prospective investors as well as current ones.
3) Categorize investors: This is the fun bit. Allocate every institution you capture into either Platinum, Gold, Silver, or Bronze. Based on how important they are to the business. This will determine the level of service they get from the investor relations function of the business:
Platinum: major funder that might expect a close relationship directly with the CFO. i.e. a meeting and dinner once a quarter. Plus, a call directly in the event material news emerges from the business.
Gold: an important bank or shareholders who get a quarterly 1:1 meeting
Silver: quarterly group meeting (with other similar stakeholders) and an annual 1:1
Bronze: an annual call
You will still need to be reactive. But being reactive is so much easier when youâve built your credibility with proactive engagement.
4) Follow through: With the activity defined in 3, you can calendarize the activity and allocate responsibilities. i.e. with a large contact book, the CFO may only be involved in platinum and gold conversations. Once you have the calendar built, you can diarize the meetings and manage expectations with your IR contact book. Once they know how and when they will hear from the company, that alone will build confidence. Itâs the silence they hate more than anything.
You can apply this framework in a large public company or even a small business - the key thing is to identify your stakeholders, and put a systemic proactive communications routine in place.
Now itâs time for those conversations.
More on that next week when we dive into managing equity investors.

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Dan from Tulsa, OK asked:
Iâm starting to help my church get its finances in order. Thereâs very little structure or financial framework in place. So far they've been doing minimal to survive. Putting controls in place to prevent fraud and cleaning up the books seems like a good place to start. How would you think about applying the principles from the newsletter to a non-profit organization? Any resources for non-profit finances you can recommend? Thanks!

Thanks, Dan. Iâve had quite a few requests for resources on non-profit finance teams. There is a reason I haven't covered this: I have never worked in a non-profit environment, and I donât like writing about things I havenât done.
So, Iâm afraid I canât really help you with any great resources here.
But in your specific situation, I can say this:
Firstly, you are right about starting with bookkeeping. Good quality bookkeeping and clean books are the first foundational steps in any finance function, however big or small. Profit or otherwise.
The other thing to think about is materiality. When you are dealing with company money you can take a risk-adjusted view on materiality. There is a cost as well as a benefit to marginal precision.
That same judgment has a different dynamic in non-profit organizations. You are managing donated money for the benefit of a shared purpose. So there is a public interest/custodial role here. I think that means you need to look at materiality differently. To ensure that donated money is directed precisely to the use for which it was intended. For example, you should have a $0.01 materiality threshold for misspent funds.
As a foundation, it all comes back to the same thing: good bookkeeping. And basic controls around how expenditure is approved.
If you would like to submit a question, please fill out this form.

Footnotes
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In case you missed it, you are getting an extra slice of crispy throughout September. a special series on AI for CFOs. If you missed the first issue, catch it here
And Finally
Next week weâve got another special edition.
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Stay crispy,
The Secret CFO
Disclaimer: I am not your accountant, investment advisor, tax advisor, lawyer, CFO, director, or friend. Well, maybe Iâm your friend, but I am not any of those other things. Everything I publish represents my opinions only, not advice. And certainly is not investment advice. Running the finances for a company is serious business, and you should take the proper advice you need.

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