How to Invest Today

Investor relations is a strategic management function whose goal is to build long-term relationships with the company stakeholders and other members of the financial community. In most companies, it is a department that handles the inquiries of current and potential investors, and provides support for the chief financial officer in decision making. The Investor Relations department must be updated with the changing trends in the stock market and should act as watch dog in order to provide reliable information to upper management.

Investor Relation functions can be outsourced to various IR consulting firms. However, the company can choose to manage some of the IR functions internally. The Sarbanes-Oxley Act of 2002 provides some insights on the IR functions and several institutions like The National Investor Relations Institute (NIRI) highlights the responsibilities of this department regarding procedures, reporting, and disclosure.

As early as possible, the companies who plan to have an IPO should decide what to do about investor relations. Before hiring a team that specializes in this field, a company should consider a lot of factors including experience, capability, equipment, and expertise. It is also advisable to check their roster of clients and try to talk to somebody from those companies to see how they are performing.

But before interviewing or making a deal with the investor relations company, there should already be a developed strategy on marketing, tracking of investors’ perception, communication, and information gathering. Various institutes such as NIRI offer courses to upgrade your skills about developing a sound strategy to deal with the financial community.

Choose a company that has a variety of contacts, strong company references, and a good mechanization system. It’s also important that they can work with you long term because their job involves strategies that need to be implemented over time. Other determining factors for picking an IR company is their ability to evaluate your stock performance, identify your potential shareholders by creating an investor kit, communicate with current and upcoming investors through modern channels, and increase your shareholders base. The ideal IR company should also have institutional awareness.

Your chosen investor relations firm will serve as a third-party team of experts that will evaluate the performance of your company. Among their many functions is to provide advice to top management, formulate press releases, manage investor conferences and presentations. Make sure that this firm can deal with negative press, crisis communication, and assist when it comes to SEC disclosure.

IR companies also have niche specializations so you also have to take this into consideration. Check if the company has relevant consulting experience in your field and if they understand the nature and requirements of your business.

There are expert teams which have the ability to adapt and manage the nature of stock market. Generally, an ideal firm for investor relations must follow the right procedures as provided by the law. It should also have the ability to implement the regulations in order to keep a harmonious working relationship with the investors.

The critic who wrote this column has detected the creator of a PSSO by the name of Josh Yudell. My perspective is Josh Yudell is also the Managing Director of a private equity fund and is credited with the creation and popularization of a funding vehicle known as a PSSO (Private Secondary Shareholder Offering).

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