Post-recession, raising growth capital and operating capital through stock offerings will depend more than ever on how well a company promotes itself with key players in the financial markets, and how successfully it builds solid relationships with them after the underwriters have gone home. Knowing how to do this is crucial.
For decades, companies gained much attention during Initial Public Offerings (IPOs). Subsequent stock offerings also garnered some attention. Now, companies face stiff competition getting the attention of the financial community. What's more, there is a sharply reduced number of players. As a result, the onus is on companies to get their information to industry sector analysts, corporate finance executives and institutional investors, among others.
Companies that fail to be assertive may well see the early momentum of a successful offering stumble, and fall victim to an apparently indifferent secondary market. Going forward, they will need to work harder than ever before to maintain share prices that reflect fair market value.
Getting and holding the attention of financial markets after the recession eases will mean battling crowds of like-minded companies trying to win face-to-face meetings with sector analysts, lead steer brokers, private investors and other market makers, and finding ways to grab the attention of the financial and industry news media.
The answer? Beat the crowd. That means thorough preparation for those crucial meetings with key players in the financial community. This will involve:
Post-recession, financial markets are going to respond best to companies that have weathered the recession better than peer group companies in their industry sector.
They will be especially receptive to companies with steady earnings growth, who consistently met their projections, and who kept them informed in a timely manner about business plans, results and any variations from plan.
But these gatekeepers of the financial community won't have this crucial information unless the companies take the initiative themselves. Few in the financial markets these days have the resources to do wide ranging research. To get their attention, companies need to do some of their research for them.
For the future, an on-going commitment to maintain contact the the financial community will help cushion market reaction during the difficult times that all companies experience, much less help lead the way out of the current economic mess.
Remember, investors are certain to be exceptionally skittish coming out of a recession-humbled business environment.