Investors
Your nomad will have explained to you something about investors. Investment is like religion: people subscribe to differing views and some differences can seem very small indeed to outsiders, but very important to the practitioners.
With the help of your financial advisers, what you would like to achieve in an ideal world is a high-quality, stable investment base. For an AIM listed company, this ideal will be difficult. You will, doubtless, meet specialist AIM investors. That is good. You may also come across hedge fund managers looking for absolute returns over a short period of time (as opposed to steady capital appreciation and a dividend stream), and this can be frustrating and time-consuming.
You should also consider hooking up with some private client fund managers.
These are people who manage the money of relatively well-off individuals and are often looking for decent capital appreciation. Their clients frequently sympathize with entrepreneurs like you and like to feel part of your progress.
Generally speaking, though, private investors are more expensive to service than institutional investors (as you have to send out more annual reports and have more entries on your share register), but they reflect your size and your investor appeal. A word of warning, though: you will meet investors who know little about your company and others who have studied it minutely. Be prepared.
Professional or institutional investors will be looked after by your nomad or financial adviser. Both your financial adviser and your PR company can help you to approach private client fund managers should you decide to go down that road.
Analysts
It is one of the jobs of equity analysts to value shares in companies in the sector that they follow. They write reports that give forecasts of the earnings of your business and they make recommendations as to what to do with the shares (buy, hold or sell).
They frequently promote their views in the media. They need to get investors to trade shares with their firm and, accordingly, they are in a fierce struggle for investor time, attention and business – just like you.
Your financial adviser’s company may have an analyst who follows your company but as you grow and develop it helps to have other analysts follow your shares. This can be a useful third-party endorsement and it also makes a market.
Try not to worry too much, though, if you cannot get lots of analysts to follow your company – as long as you get some. Analysts will not write research just because your business is interesting or you’re a nice person. Analysts need to feel that they can make their firm money by following your company. It takes just as long to build an Excel spreadsheet on a small illiquid company as it does for a big liquid firm.
Analysts can sometimes be difficult. They are paid to explore the options and ask those awkward ‘What if?’ questions. Consequently, they can take a contrary view and sometimes might signal a sell on your shares. It is very hard to do this, but try not to take it personally. If their view is well argued and sticks to the approach that your shares are overvalued then the best reaction is to be philosophical and prove them wrong through performance. Sometimes it does feel as if the attack is more personal: usually it is not but, again, try not to make enemies. There is no point – the City of London is a small place.
A good PR firm should be able to help you deal with equity analysts, identifying which firms are most appropriate to target and how to talk to them.
Site visits and seminars are other appropriate tools for explaining your business to the markets. Having seen your business, your PR firm should suggest, for example, that you might need to arrange a visit to see one of your factories, a number of your stores, or your laboratories. Only so much can be learnt, after all, from building a spreadsheet from the annual report and the website. Your PR people will advise on what to show (and what not!) and how to structure the day. You should always make an announcement to the market that you are holding such an event and tell them what will be discussed. In this way investors who are not on the visit or at the seminar cannot claim they were kept away from newsflow about your company. It is important to be open and to be seen to be open.
The press media
Trade and regional press
You may already have had an introduction to the business media via your industry trade press. As we note below, some sectors of the market have a very well- developed business press that is read by companies, analysts and bankers and even by the business journalists on the daily and weekend business sections. Trade press can remain just as important when you have listed, maybe even more so, as you may now enjoy the halo of being an ‘authority’ on the industry. Your PR people will advise as to how to nurture this relationship.
There are, though, some new people that you will meet.
Let us start with the business wires. These are organizations such as Reuters, Bloomberg, AFX, Press Association (PA), Dow Jones and Citywire that provide stories and data electronically to subscribers in the print media and in financial insti- tutions. They are very competitive to get the story first, and what they produce often ends up in the regional newspapers’ business sections. Newswires are up and running – like analysts and brokers – early in the morning. They can help set the tone of the news about you for the day.
This brings us on to the regional newspapers (like the Yorkshire Post). If you have a major plant or outlet away from London, your PR people will advise you how to deal with them and build appropriate relations. Regional media can be very helpful in getting important messages across to staff and suppliers but, be warned, they have a strong focus on jobs. Restructuring activity is often met with little sympathy.
Financial press
Specialist financial publications like the Investors Chronicleand Sharesmagazine are often good shop windows. They are read by professional and private investors alike and often follow themes – like ‘green’ investing – or have special features on certain industry sectors. Again, it is worth taking some time with them, as they have the capacity to provide coverage of your business and sometimes have the space to write at some length.
You should recognize too that these publications are also a good breeding ground for talent: yesterday’s Investors Chronicle writer is tomorrow’s FT news editor.
Journalists maintain their contacts over many years, so you can see the value in having a good relation with these writers.
The national newspapers
Your PR company should be able to talk you through the business sections of the national daily newspapers and those of the weekend press. The major business newspaper is the Financial Times(FT), but all the other newspapers run business sections, albeit with differing styles and constraints on space.
The difference here is that competition for space is intense. You can find yourself bumped out of the paper by a more apparently newsworthy story from a bigger company even though you may have spent half an hour on the phone to a journalist.
Try to be philosophical: it happens, but there will be other opportunities.
Pictures
Whilst on the subject of the business press, it is worth thinking about pictures. Old- school business journalists are fond of saying that ‘A decent picture is worth a thousand words.’ By the same token, a rubbish picture of a grey-haired, grey-faced manager taken in a photo booth just opens you to ridicule. Better no picture than this sort of snap. A good picture can make the difference between getting a story published about your company and not. Your PR company will encourage you to spend some money on briefing a professional photographer to get the most out of your business. And the good thing about photos is that you can use them again, for example on your website and in your annual report.
The broadcast media
Television and radio are unlikely to want to get to know your business at listing – unless, that is, it is very big or in a consumer-oriented sector like easyJet, for example, or could possibly be part of a feature on, say, Chinese businesses raising capital in London.
Generally speaking, the broadcast media devote little of their time and attention to business and, when they do, their shows are often wronged-consumer related (think Watchdog here) or are focused on big restructuring, ie job loss issues.
Nevertheless, there may well be moments when you will have to and may want to engage with broadcast. Your PR people will advise – but it is unlikely to be at flotation. Approach with caution.
Website and annual report
Anyone under the age of 35 goes straight to your website. They expect you to have an up-to-date and relevant website. Don’t fight it: this is life. If your PR company does not do website work itself – and most do not – then they should know someone who does. They can advise on content and costs.
The same thing applies to the annual report. Do not underestimate the annual report: it is an important and legally required document and should reflect both what has happened in the year and also your aspirations.
In summary, your corporate identity is important and it should be the same on both website and report. Letterheads, typefaces and so on should all conform.
Internal communications
It might be tempting to be like Mr Burns in The Simpsons (‘Money fight, Smithers?’) and be an unreformed robber baron when dealing with staff, but we would not recommend it! In fact, it is a sad observation that most companies’
communications with their own employees – potentially the best ambassadors for the business – are pretty indifferent.
Many of your employees will have seen ‘City types’ wandering around your business and have wondered what is up. Wonder quickly turns to worry and this is magnified by gossip. As a result, when it comes to listing there may well be lots of questions – and not a little fear – internally. We recommend that you take a little time to explain to your employees what is happening and how this may, in fact, benefit their lives, especially if they have an opportunity to become shareholders.
Suppliers
Going public is also an opportunity to enhance relations with your suppliers. By virtue of the fact that your suppliers will now be able to see the value of their rela- tions through your published accounts there will of course be fewer secrets. But
there may also be some nervousness, as they will recognize the pressure that you will be under from your investors to maintain efficiency. Nevertheless, for them to be able to share in your kudos – royal warrants, for example – could be a good marketing tool for them. Together with your PR people, think of ways in which you can use your listing to promote your business with your suppliers.
Trade groups
You may well find yourself in a similar position with trade groups, ie that your profile has become raised and your weight within the trade body may increase. It is not an immediate public relations step, but together with your advisers you may want to take a moment to review your approach to lobbying given your raised profile.
Web-based pressure groups
Much has been written about the power of the internet and its capacity to change business practices. You may be familiar with the story of a music player whose screen kept breaking and how an internet-based campaign encouraged the manufac- turer to make changes. Others might know of various fair trade initiatives that have started on the web. It is clear that the web can be a powerful agent for change.
On the other hand, the web can also provide an excellent soapbox for bigots and, worse, can make such people appear more important than they are. If you think there may be an issue out there, consult your PR advisers. And, by the same token, if you are in a data-sensitive, eg R&D-based, industry, then chat rooms may well need monitoring. You do not want any false or misleading information to be relayed from the web to the press, so consult your PR people if there could be an issue.