Thursday, December 30, 2010

The Importance of Investor Relations

By Teresa Perez

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.

Before hiring an investor relations firm, the company has to evaluate its ability to absorb the function or the capability of the underwriting firms to offer the service. The process must be undertaken before deciding to go public with the initial public offering. Investor relations firm has a key role in establishing and maintaining the relationships governing the financial community. That is why a lot of corporations seek the firms specialization in such matters. Moreover, companies can get the additional contacts in employing the services of an investor relations firm which can prove to be quite helpful in making the company spread its name.

The functions of a good investor relations firm are quite straightforward. It establishes a very viewable point of contact for various investors as well as for the media. It has the answers to all the questions and provides the necessary information. The firm achieves the goals set by the company through a combination of press releases, internet resources, webcasts and phone calls. The investor relations firm also serves by handing out brochures and other kinds of corporate collateral. This includes the presentation materials, fact sheets and earnings release, all of which are important prior to 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.

The services of almost any investor relations firm include heavy roadshow support and the company can also contribute in composing the financial reports to be presented to interested investors. Reliable firms make meetings with potential investors happen as preferred by the issuing company.

For companies with a lesser need for capital, the demand for investor relations firms may not be quite high. Regardless, its services are still just as helpful to a smaller company as it is for a company using initial public offering to seek funds. Sales are not guaranteed because direct public offering has no underwriting. With this, the company bears all the grunt and does the manual effort of making the issue become a success.

Most companies, especially the small ones, find it time-consuming and stressful to handle the process of offering and selling public shares. That is why the best approach in making thing easier would have to be hiring an outside investor relations firm in marketing the issue and coordinating with the investors. The firm gives the company a more professional and presentable look to attract more investors. It creates a picture of profitability and stability.

Although its still possible to make an issue successful even without the help of an investor relations firm, the chances of success certainly improve with one. By letting the investor relations functions handle the issue, the company can concentrate on other matters.

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