In today’s wired world, no-one talks much about meetings. The spotlight is on internet technology, webcasts, faxes, conference calls and other electronic advances. And to many, especially those dealing with small companies or IPOs, this may suggest in-person meetings are a tiny part of today’s IR.
But in speaking to IR practitioners, another picture emerges. Virtually all IR experts, in-house or outside, see in-person meetings as crucial. The demand is there, both from companies and investors, to meet face-to-face. And many experts consider these in-person meetings even more critical for a successful program than ever before.
Valerie Gerard, CFO of SmartMoney, puts it this way: ‘In my opinion nothing is going to replace an opportunity for an analyst or investor to be able to sit across the table from management and ask questions.’ Gerard should know. Until recently, she was director of IR for Dow Jones, the person who built the company’s new, very successful IR program.
Mark Aaron, Tiffany’s VP and director of IR, agrees: ‘I don’t think anything today can fully replace meetings with institutions, whether large meetings or one-on-ones. IR is about creating and maintaining those relationships.’
These professionals generally believe that technology has made it possible to reach more investors faster. The internet, in particular, makes it easier to introduce new companies to a wider audience. But technology is no substitute for meeting management in person, or even visiting the company: ‘Webcasting is not replacing analyst meetings,’ insists Lou Thompson, president and CEO of Niri. ‘It is an add-on.’
Disappearing act
At London-based IR consultancy Imagination, Bill Simon, a senior project manager, admits that at one time it looked like in-person meetings would disappear. ‘We did have some thinking about six years ago that face-to face meetings would become a thing of the past,’ he says. ‘But today we recognize that management feels meetings are a vital part of the process. They rely on them for raising big chunks of capital.’ Because of this the traditional group meeting has retained its importance.
In fact, Simon believes that the absolute number of group meetings has probably stayed around the same as it was ten years ago. What has changed is the number of companies holding these meetings. The number of public companies has rocketed, even outstripping the number of investment and money managers that provide an audience. Consolidation of institutional money management firms are one part of this trend.
In-person meetings are flourishing for a number of reasons. For one thing, there is more competition for large and small investment dollars. The last decade has seen explosive growth in the number of public companies. ‘It’s increasingly competitive,’ says SmartMoney’s Gerard. ‘You have to attract the right investors to your stock.’ Meetings can do this more easily than techniques like webcasting because they are targeted. When Dow Jones revamped its IR program the idea was to attract analysts who viewed the company as a value stock; as time passed, the company became a growth opportunity. Through targeted meetings on-site and around the country, the company could build relationships with the appropriate analysts and investors at each stage in the process.
Another advantage of meetings is their potential impact on investment professionals. Everyone has heard analysts say they walked into a company meeting with a ‘hold’ rating and came out with a much more positive view that ended in a ‘buy’ recommendation. In fact, Arthur Occhi, head of the New York-based Equity Group, says, ‘Most stock recommendations take place after a face-to-face.’
Immediate effect
Meetings also create an immediacy and dynamism that it is hard to replace with a webcast or conference call. There is ‘the feeling of energy being at the live meeting with the opportunity to interact with speakers and other members of the audience,’ says Jennifer Ian, director of marketing at the New York Society of Security Analysts. ‘We consider live meetings as important as ever,’ she notes.
Outside of IPO roadshows, meetings today generally fall into four major categories: industry conferences; one-on-ones; on-sites; and traditional company group meetings, both large and small. Of all these, industry conferences have grown the fastest. Each year major investment banks, regional brokerage firms and trade groups hold dozens of conferences for companies in different industries, of different sizes and considered to be different investing styles. You name the investment theme or new industry, and you can probably find someone holding a conference for it.
Industry meetings save time and money. They give analysts and institutional investors an opportunity to listen to six to twelve companies per day provide succinct versions of their standard IR presentations. It is much easier than traveling to meet with companies on-site. Mary Ellen Hillary, vice president for media and public relations at Salomon Smith Barney, notes that there is strong client demand for these conferences. ‘If clients have an interest, it’s part of the service we provide,’ she says. Salomon Smith Barney, like other firms of its size, has its own conference planning division.
But despite the convenience of this format, some IR professionals believe the conference format has been overdone. ‘The uniqueness has been lost,’ says John McNamara, a partner at the Financial Relations Board, a major US IR firm. This proliferation certainly puts pressure on companies to appear at multiple venues. Tiffany’s Aaron, for instance, reports that the company attends only a fraction of the industry conferences it is invited to. However, he believes those opportunities are very useful. ‘We speak at a lot of sell-side brokerage conferences,’ he says. ‘Those enable us to reach a broad audience, especially among retail analysts or growth stock investors.’ However, he admits the company has to be very selective, since it is invited to so many conferences these days. Some invitations have to be accepted on a rotating basis. Overall, company management usually attends six or seven conferences a year.
One-on-one growth
The one-on-one meeting has also been exploding. These are meetings held by large professional money managers, frequently mutual funds, to meet with company executives either at their own offices or at a company location. The growth has been spectacular. At Fidelity Investments, for instance, the number of companies that visit has more than doubled over the past few years – to 4,502 in 1999 from 1,343 in 1996. In that time, Fidelity’s assets jumped to $883 bn from $461 bn.
On-site meetings have also become increasingly popular. These meetings are particularly convenient for companies located in major financial centers such as New York or London. If the meeting is held at headquarters, executives do not have to travel far and the company saves substantially on costs because it does not have to rent a meeting space.
Dow Jones used a large on-site to kick off its reinvigorated IR program in the fall of 1998, according to Gerard. Guests were sent customized invitations to the morning meeting which started with breakfast followed by a presentation, a Q&A period and an optional opportunity to view Dow Jones print and electronic products and services at a separate nearby site.
The presentation, given by top management, contained video segments of additional executives commenting on various key points. ‘I think that was a very effective format,’ observes Gerard. In Dow Jones’ case, Gerard believes it was important to show analysts and investors the actual products of the company at a headquarters location in order to dispel the image of a dusty, behind-the-times behemoth.
On-sites can also be very effective for young, new companies that are introducing themselves to the investment community. Occhi, whose firm caters for small caps, has used this technique – which he calls a ‘walk-through’- for several clients. However, a company cannot host such visits too often. It could end up showing the same products, services and facility over and over again to the same people.
But like other major corporations, Dow Jones supplements its on-sites with a panoply of other types of meetings – primarily small group meetings or one-on-ones in other cities. Gerard maintained a rigorous travel schedule in her IR position, traveling to cities like Boston for a series of group and one-on-ones. ‘Dow Jones has a very active investor calling effort to meet with institutional investors,’ she says.
Structure counts
The structure of large group meetings seems to have changed very little over the past 25 years. It follows the structure Gerard used for her on-site: A social opportunity (over breakfast, lunch or cocktails); a presentation from top management; plus a question and answer period. What seems to be changing is format and emphasis – due to both technology and the new shape of the capital markets.
The multimedia presentation is definitely in. Virtually everyone creates PowerPoint presentations that can be customized and shown through a PC, as opposed to slide projector. According to Andrew Corn, head of Admaster, a New York-based design and branding firm, ‘Presentations are getting more and more elaborate.’ His firm specializes in customizing presentations through the use of special software to provide such add-ons as video capability or sophisticated animation. Creative use of this new technology allows companies to create more effective – and targeted – presentations which differentiate them from others.
Corn calls this capability ‘customizable multimedia’. In smaller meetings, the presenter can select certain ‘chapters’ or screens for that special audience. There is no need to use the entire presentation, unless the presenter feels the analyst or groups needs to hear it. In a small group, the presentation can be shown on small studio display screens that the presenter sets up on the table, says Simon. These small screens function like an electronic flip chart and have clearer resolution than a laptop screen.
Center stage
In terms of content, strategy is now taking center stage in many presentations. According to Simon, many companies weave the presentation around this theme, laying out the strategy first and then tying each part of the presentation into it. This approach works well with dot-coms that haven’t yet produced earnings. ‘More people are basing the investment decision on future earnings, not earnings results,’ Simon says.
Clearly, the large group meeting remains the centerpiece of many investor relations programs, especially for large companies and new, smaller firms, representing new names or ideas and which are just meeting the investor community.
But management, it seems, frequently would prefer to stick with smaller group meetings or one-on-ones, according to Simon. The reason for this, he says, is that smaller meeting usually result in more interaction and better questions from participants. But investment banks continue to exert pressure for companies to hold larger marquee-name meetings in major financial centers which are traditionally thought of as the anchor of large roadshows.
A few weeks ago, for instance, Imagination organized a roadshow for the Spanish bank BBVA in the US and Europe, when the bank was raising capital to fund its e-commerce strategy. The company’s investment bank insisted on large group meetings in New York and London as the centerpiece of the program. These were held, despite the fact that, according to Simon, such meetings usually generate little audience interaction.
Will in-person meetings continue to flourish? The answer seems to be affirmative because of the advantages such meetings hold. It is the only way companies can differentiate and sell their story to selective audiences through ups and downs in the marketplace.
This doesn’t mean that technology will not become more and more important. Tiffany’s Aaron says that he uses much more technology today than he did 13 years ago, including faxes, e-mails, conference calls and the company’s own web site. ‘Technology can help to reach the financial community on a global basis,’ he says with enthusiasm. But he does not believe technology will replace in-person meetings to build and maintain a good relationship.
‘People on the other side really appreciate the face-to-face aspect of a one-on-one or small group meeting,’ he concludes. ‘I don’t think it would be very effective for you to hidebehind a computer.’
