15 IR Priorities Every de-SPAC Needs to Focus on After They Break-out of Their Shell

In our last article, we discussed the key trends shaping the investor relations space. In this bulletin, we cover the key priorities that new public companies, or companies developing an initial capital markets strategy should focus on – this is especially relevant to SPACs after the close of their business combination.

Over the years, SPACs have gained popularity among private companies as an alternative to the traditional IPO route for going public (new capital). SPACs are public shell companies that are formed to raise capital through an IPO and then, following the IPO, use the proceeds to acquire one or more unspecified businesses. There are three stages involved in this process: 1) going public, 2) acquiring the target company, and 3) DE-SPACing. While a lot of time and effort is required in these three stages to ensure that the deal is consummated (read our piece on Role of IROs & Sponsors During the DE-SPAC Process here), the newly formed public company also needs to engage with investors and analysts in order to raise funds through follow-on public offerings, rights issues, or private placements. Therefore, it is important for IROs to have a well-defined strategy to continue their IR efforts after the closure of the business combination. We believe these priorities can be bucketed under the following four headings: 1) Systems and Relationships; 2) Content; 3) Outreach; and 4) Intelligence. We discuss each of these in detail below.

Set-up and Manage Systems and Relationships

1.      Set up systems like NASDAQ IR Insight, Notified, and Edgar Agents. Once the DE-SPAC process is completed, IROs of the newly formed public company need to have access to the basic tool kit required to carry out routine tasks effectively. One such tool is Nasdaq IR Insight which is purpose built for the intelligence, engagement, and productivity needs of the modern IR team. It allows companies to 1) engage with active, passive and ESG stakeholders as well as the sell-side, 2) monitor global markets, peers and key commodities, 3) analyze and understand ownership, 4) informs the company’s executive team, Board, and corporate strategy units through real-time alerts, reports, and analytics, and 5) helps execute key IR program workflows with purpose-built tools. Another tool is Notified whose IR Cloud solution helps investor relations professionals manage communications – earnings calls, regulatory filings, press releases, investor days, and IR Websites. The company recently expanded its partnership with NASDAQ – the agreement allows Notified to offer Nasdaq OneReport software to its investor relations, public relations, and event cloud customers, and simplifies ESG data management and reporting for companies. Finally, there is EdgarAgents, a full-service financial filing and printing firm that converts financial documents into EDGAR and XBRL formatted files and files them directly with the SEC. It helps companies with a range of filings including 10-Ks, 10-Qs, 8-Ks, Registration Statements, and Section 16 filings.

2.      Create and maintain a compelling IR website. A compelling IR website helps companies effectively communicate important information to a broad investor audience without geographical limitations in an easy, real-time, and consistent manner. Given this backdrop, IROs should consider the following best practices while creating and managing their IR websites: 1) Convey company information and strategy along with investment thesis; 2) Make the IR website intuitive and easy to navigate; 3) Provide information on SEC filings and the latest financials; 4) Include plenty of details on corporate governance; 5) Provide detailed IRO contact information; and 6) Reserve a section for frequently asked questions (FAQs). IROs can also consider working with Notified to host the IR website. Click here to read our detailed piece on “Best Practices for Creating a Compelling IR Website.”

3.      Support transfer agent. Transfer agents work for the security issuer to record changes of ownership, maintain the issuer's security holder records, cancel and issue certificates, and distribute dividends. Required to be registered with the SEC, transfer agents are usually banks or trust companies, though sometimes a company acts as its own transfer agent. While supporting transfer agents, SPAC/DE-SPAC IR teams need to provide administrative support, specifically around getting investor lists from the transfer agent and other supporting roles to support their executive teams. While any proxy support should be coordinated through a proxy specialist, IR teams should coordinate with the legal council to register restricted shares and distribute shares to shareholders efficiently.

4.      Collaborate with the PR team for interviews, articles, social media, etc. Responsibility of a company’s communication activities typically falls in the lap of the PR and IR functions. IR communication is focused on institutional investors while PR communication typically targets the retail audience. However, a business approach centered around silos can result in limited communication between PR and IR teams. In the best run companies, all communications are coordinated, consistent and aligned; and that includes Corporate Communications, Internal Communications, Customer Communications, Investor Relations, Public Relations and relations with the Media. We believe aligning a company’s communications strategy can lead to improved visibility in the investment community and among its target customers, increased sales, and a higher market cap. To that end, companies should follow the following best practices align their PR and IR teams, and leverage them to control and maintain their narrative: 1) Make PR and IR teams understand and learn from each other; 2) Prepare an integrated plan between PR and IR functions to meet their respective goals, as well as the company’s objectives; 3) Ensure that both groups are reporting to the same manager or have a dotted line; 4) Involve both teams to create clear and consistent messaging across all platforms; 5) Ensure collective monitoring and harmonized response. Read our detailed piece on Driving Collaboration Between PR and IR Teams here.

Have a Well-Defined Content Strategy

5.      Create an engaging and effective investor deck. An investor deck is the most important way for IROs to propagate their company’s investment thesis and is the leading source of company information for the investment community. Thus, an investor deck that fails to effectively capture the company’s story, value creation, long-term vision, key KPIs/metrics/catalysts, etc. will fail to grab investor attention, which is already low given that investors typically meet multiple companies per day and only remember companies with a strong value proposition. Therefore, narrating the company’s story through an effective investor deck that covers key aspects is important. For starters, aim to create a lean deck and follow the ‘10/20/30’ rule – the rule, laid out by marketing specialist Guy Kawasaki, says that an investor deck should be limited to just 10 slides, be delivered within 20 minutes, and use fonts no smaller than 30 point size. In addition, ensure that your investor deck has a compelling story, in line with your IR narrative. Remember to include key model metrics, milestones, and catalysts so that the Street can stay on top of company’s performance and identify positive tradable events. IR teams can also consider embedding a corporate video within the deck to present their company’s story in a more engaging fashion. Finally, maintain a consistent design theme across all slides, avoid text-heavy slides, judiciously use visuals and graphics, and include contact details of the designated IR contact person at the end of your deck.

6.      Manage the press release process – from creation to approval to distribution. Most press releases are anticipated by management, and thus managing a press release pipeline to time “trading catalysts” is what experienced IR/PR teams develop. We suggest most companies have ~5 material press releases in backlog that are timed around formality of an event, but enable a constant flow of information from the company. At the creation stage, teams should work toward drafting a release with a subject that is relevant to the investment community, is brief yet comprehensive, has key takeaways/bullets atop and follows a structured approach, uses multimedia (images, infographics, videos, etc.) for adding context to the narrative, and does not sound very promotional due to inclusion of overused words like “unique,” “cutting-edge”, “exciting”, “best of breed,” and “unprecedented”, among others. Make sure to include quotes from the senior management and to the extent possible, try to back statements in the release with relevant facts and statistics. Once a draft PR is ready, the next step is to share it with the management team and incorporate edits and finally get the sign-off of the legal team. Once finalized, the press release should then be published over platforms like Notified to drive brand awareness and enhance media coverage.

7.      Develop a centralized repository of Investor FAQs. Most investors – past, current, and prospective – will have questions that they would like the company to address. These questions could be related to shareholding, financial reporting, dividends, and taxation, or could be about the business fundamentals, corporate strategy, capital allocation policy, management vision, etc. In most cases, there will be an overlap in questions. As such, it is important for the IR team to gather these frequently asked questions (FAQs) and work with executive team to develop a centralized document capturing the answers to those FAQs. Once finalized, those FAQs and the answers should be put up on the IR website for al investors to see. Doing so makes the process more efficient and also displays transparency on the part of the company.

8.      Prepare your earnings call transcript in collaboration with senior management. While preparing the EPS call transcript, IR teams should coordinate with the senior management to discuss the larger story that needs to be communicated. Schedule meetings with the senior management and incorporate key trends unfolded during the quarter in your draft. Moreover, while structuring the transcript, add one- or two-line bullet points summarizing the key financial, operational, and management updates at the start. This will offer investors a quick summary of the earnings report. Once drafted, review and circulate the transcript with the CEO, CFO, and other relevant departments to ensure that the messaging is appropriate, and the numbers are consistent. Importantly, ensure that your EPS call transcript are finalized one-to-two weeks prior to the EPS call. Click here to read our article on steps that IROs should take while preparing for the earnings season (before the call, during the call, and after the call.)

9.      Prepare your governance documentation, including ESG policies. Given the growing importance that investors are placing on ESG performance of their portfolio companies, it is important for companies to develop and disclose their policies covering a variety of subjects. These policies should be developed in collaboration with the management team and the respective business segment/function head and should be signed off by the legal team. Such policies and documentation include, but are not limited to, Code of Business Conduct and Ethics, Compliance Charter, Executive Committee Charter, Compensation Policy, Environmental and Sustainability Policy, ESG Charter, Health and Safety Policy, Insider Trading Policy, IP Charter, Labor and Human Rights Policy, Governance Charter and Policy, Regulation FD Disclosure Policy, Supplier Code of Conduct, Whistleblower Policy, Anti-Corruption Policy, and Audit Committee Charter, among others.

Manage Shareholder Outreach

10.  Manage investor inquiries in a timely and effective fashion. As discussed earlier, your IR website and company deck should have a designated contact person (with direct contact details) to address any investors questions that go beyond the FAQs. As such, it is the responsibility of this person/team that all investor questions are presented to the management and a response is delivered in a timely and effective fashion. While doing so, it is important to ensure consistency in response across platforms and different investors, as different answers at different places can create confusion and misinformation. 

11.  Leverage expertise of sell-side analysts and engage with them on an ongoing basis. Sell-side analysts are an essential part of an IR strategy as they help boost stock liquidity and improve company recognition in the investment community, thus leading to market cap appreciation. Investors depend on the analysis of a company to make good investment decisions and allocate their capital. Even though public companies generally choose to self publish a majority of the information about themselves, an important source of information and analysis for investors is the company research produced by sell-side analysts. We believe IROs should take the following steps to effectively manage their relations with sell-side analysts to boost their investor targeting and education efforts – 1) Provide analysts access to the right company officials, 2) Enhance disclosure to give analysts clarity around the company, 3) Respect analysts’ ratings and avoid pressurizing them to produce favorable reports, 4) Ensure regular engagement and timely communication with the sell side community, and 5) Acknowledge the analyst’s efforts and develop an incentive structure that is win-win for all. Overall, the IR team should work with the management team on outbound efforts to engage and attract sell-side coverage. Read our detailed piece on “How IROs Can Leverage Expertise of Sell-Side Analysts” here. 

12.  Manage IR calendar. One of the key responsibilities of the IR team of a publicly listed company is to manage the IR event calendar – in addition to company-facilitated events like EPS results and call, this includes selection of industry events like conferences, webinars, etc. as well analyst days/broker conferences relevant to the company. The IR team should identify all such events for the next twelve months and then discuss participation in such events with the management. Ideally, the company CEO should participate in all such events; however, in case of conflicting schedules, ensure that senior executives like the CFO and relevant division heads are representing the company. Participation at such events should be broadcasted to investors in advance through a press release so that interested parties can fix a meeting with the management.

13.  Participate in relevant non-deal roadshows (NDRs). Non-deal roadshows are private meetings between management and institutional investors, typically organized by sell-side analysts. Investors typically use these meetings to access management and evaluate the company better through a discussion focused on a range of topics including strategy, milestones, fundamentals, ownerships, governance, guidance, etc. IR teams should facilitate investor outreach collaboratively with sell-side analysts and go into such meetings well prepared so that they can address investors questions and concerns, as well as develop long-term trust-based relationships. Therefore, developing a focused and forward-looking calendar of NDRs to participate in should be a key priority.

14.  Hold annual investor/analyst day. Another critical part of a company’s investor outreach efforts is holding an investor/analyst day. For larger companies, an analyst day could be an annual event hosted by public companies to help them share valuable information with security analyst and strategist. The objective of holding an analyst day is to help the sell-side and investors in better valuing your stock and give them a deeper understanding of your company. We believe IROs should keep following best practices in mind when considering conducting an investor/analyst day – 1) Identify investors in your company and those in your peer group using third-party services/IR tech firms to build a well-targeted list of investors; 2) Research the stand of these investors on various issues affecting your company and industry; 3) Reach out to investors in advance to understand their preferred mode (virtual/physical/hybrid) and understand issues they would like the company to cover; 4) Select speakers that are aware of key trends impacting your company and hold a Q&A session at the end of each speaker’s presentation; and 5) Take feedback from participants to improve future investor events.

Intelligence

15.  Track peers and competitors using competitive intelligence tools. Competitive intelligence is one of the critical elements of a corporate strategy as it offers businesses a complete picture of their competitive landscape and helps them develop well-informed business decisions. Given the rapidly evolving business and financial market landscape, companies are regularly facing new challenges and new competition. As a result, it is crucial for them to rely on competitive intelligence to analyze their peers and develop business strategies that help them stay ahead of the pack. Competitive intelligence involves gathering and analyzing information ethically on your competitors’ operational, organizational, and commercial activities. This not only makes it easier to understand your peers’ strengths and weaknesses but also can position you to anticipate their next moves. competitive intelligence also helps companies bridge the gap between their investment brand’s perception vs. reality. For example, the Street may be wrong when it judges small companies with a relatively better technology as inferior to their larger peers just because of their size. Competitive intelligence allows IROs to identify such anomalies and take proactive steps to correct this perception. With the above backdrop in mind, following are the steps that IROs can take to employ a competitive intelligence strategy and benefit from it:

o   Identify your peer group, bearing in mind that there will likely be subsets of the overall group.

o   Look through key information sources such as press releases, earnings call transcripts, IR decks, analyst reports, and websites of peers.

o   Consider utilizing platforms that provide AI-driven document searches.

o   Analyze your competitors’ shareholder base to identify compatible investors.

o   Coordinate with senior management, division heads, and other employees to garner unique insights about peers.

o   Meet investors, bankers, or sell-side analysts to understand market trends and the evolving competitive landscape.

o   Attend trade conferences to spot the growth initiatives being taken by peers.

o   Regularly communicate the information collected to senior management.

About Intro-act

Intro-act optimizes corporate access in the post-MiFID II era. Intro-act’s machine learning prediction engine targets the most likely institutional buyers and sellers of a stock in the next 90 days and offers independent research to promote efficiency and transparency throughout the corporate access and investment process.

Intro-act’s services facilitate higher-quality meetings based on superior preparation for both investors and corporate executives because of centralized access to critical materials, including video, models, commissioned research, and agenda materials. The result is converting more investor meetings into shareholders and improving the ROI on corporate access.

Intro-act’s founders have over 50 years of experience (DLJ, Fidelity, First Call, OTR, Thompson Reuters) in capital markets, corporate access, and building investment research businesses. They realized that a regulatory change (MiFID II) would compel corporate investor relations to become increasingly responsible for servicing and growing their investor pool but would need to do so with fewer resources. Intro-act was created to help corporations fill this void. We use machine learning to predict investor behavior, analyze factors influencing investment decisions, and provide independent research services for investors and corporate IR officers. 

For more information: www.intro-act.com

15 IR Priorities Every SPAC Needs to Focus on Post Closure of Business Combination