Thursday, December 30, 2010

The Importance of Investor Relations

By Joyce Jones


There will come a time that hiring a separate investor relations firm becomes necessary depending on the nature and size of a public offering. It has been proven that services offered by professional investor relations assistance can be quite beneficial to both initial and direct public offerings.

The move to hiring an investor relations firm may have to depend on the ability of the company to take in the function or the underwriting firms capability to provide the service. This should be done once a company decides to go public with an initial public offering. Investor relations firm can prove to be quite significant in the establishment and maintenance of the relationships circling within the financial community. Therefore, many different corporations would rather hire a firm that specializes in such aspects. Another reason why companies seek this service is that they want to gain extra contacts through the investor relations firm.

A good investor relations firm has very direct functions. It works as a highly viewable point of contact for many investors as well as for the press. It provides the required information and answers the questions. Through a combination of internet resources, press releases, webcasts and phone calls, goals that have been set are met almost immediately. The investor relations firm is also responsible for handing out brochures and other types of corporate collateral. This includes earnings release, presentation materials and fact sheets that are significant before an offering.

The investor relations firm plays a vital role before an initial public offering is made. A good firm aims to attract investors by projecting an image of success and stability for the company. This is one of the reasons why the firm can really help in making an issue successful.

Almost all investor relations firms provide heavy roadshow support and the company may contribute with the composition of financial reports to be presented to potential investors. Good firms also chip in by arranging various meetings with prospective investors as preferred by the issuing company.

In the case of companies with a smaller need for capital, the demand for investor relations firms is not very common, especially with the direct public offerings. However, its services are just as important to a smaller company as it is for a company employing initial public offering to seek funds. There is no underwriter to ensure sales with a direct public offering and so, the corporation shoulders the full responsibility of making the issue a success.

Working to provide and sell public shares can be quite time-consuming and stressful for many companies. Therefore, the best approach would have to be employing the services of an outside investor relations firm to market the issue and collaborate with the investors. The firm definitely makes things easier and aids the company in achieving a more presentable and professional appearance to the investors. It projects an image of stability and profitability.

The issue can still be quite successful even without employing the services of an investor relations firm. However, there is a higher chance of success with one. The company can concentrate on other important matters by allowing the investor relations firm work on the issue.




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