Investor innovation: the rise of the virtual non-deal roadshow
Non-deal roadshows – where companies talk to investors even when they aren’t going public – are a proven method of enhancing communications with investors. As first quarter reporting is well underway, management should consider planning and executing a non-deal roadshow, either in person or virtually, to address investors’ questions and share the outlook for your company in yet another atypical year.
Primer on non-deal roadshows
A non-deal roadshow is an investor relations program during which management meets investors not for the purpose of selling securities, but simply to talk about topics of interest such as company milestones, financial results, products, research and development, customer relations, human resource, guidance, etc. The goal of a non-deal roadshow for management is to effectively communicate the highlights and investment propositions of the company so current shareholders can follow the story more closely and potential investors become interested in eventually purchasing your shares.
Pre-pandemic, non-deal roadshows mostly took place at investment centers around the world. Over the last fourteen months, many such roadshows have taken place virtually. Both management and investors have come to appreciate the convenience, flexibility, and cost efficiency of virtual roadshows, as well as the opportunity to greatly expand the potential audience base. Despite the progress in vaccination and gradual increase in business travel, we anticipate that non-deal roadshows will likely take on a hybrid approach of traditional and virtual roadshows existing side by side going forward.
Logistics of non-deal roadshows
Typically, management would work with either an investment bank or external IR agency to run a non-deal roadshow. While an investment bank tends to arrange roadshow meetings based on its own portfolio of clients, an IR agency has unconstrained access to potential investors as long as they match what management is looking for.
After the time and location are set, the key to a successful roadshow is to identify potential investors that could be good fit for the company in criteria such as industry category, market cap (large cap, mid cap, small cap), investment style (GARP, growth, value), peer ownership, etc. A non-deal roadshow could have as little as three meetings or thirty meetings, depending on availability and interest level from investors. In most cases, the number of meetings average 15-20 per week, unless the roadshow includes breakfast or lunch group meetings.
Roadshow meetings usually come in two forms – one-on-one meetings are more personal and allow investors to converse directly with management, while group meetings are better suited for investors who appreciate the opportunity to not only hear from management but also learn how others think about a particular company. Either way, these meetings represent invaluable opportunity for investors to learn and analyze investment targets beyond what is available on company press releases and filings.
7 benefits of non-deal (virtual) roadshows
1) Keep investors updated: fresh off quarterly reporting, non-deal roadshows give management the opportunity to clarify any areas of doubt and make sure that investors fully understand the results and the company’s strategy going forward.
2) Keep investors engaged: non-deal roadshows provide an avenue through which management can interact with top institutional shareholders. Yes, management is likely to be in regular email contact with investors. Roadshows are dynamic and personal way to engage with investors that often include a wider range of topics of discussion and a wider cast of participants. All of which is to build and ensure healthy relations with investors.
3) Meet new investors: non-deal roadshows are a powerful tool with which management can proactively reach out to potential new investors. With virtual roadshows, management has the opportunity to interact with investors in parts of the world that might otherwise be difficult for them to reach via on-the-ground roadshows. In addition, some investors keep a low profile and choose not to attend public investor conferences. Hence, non-deal roadshows greatly increase the geography and pool of capital that a company can access.
4) Gain valuable feedback: after telling more or less the same version of the company’s story to various investors, management will receive opinions and perspectives from investors, with which management can gauge the effectiveness of their communication and think of ways to refine specific story angle for the future.
5) Maximize your time on the road: in-person investment conference eventually will make a comeback. Non-deal roadshows are a great way to maximize management’s time on the road by allowing them to meet with additional investors in the same city or neighboring cities or states who are not attending the conference management is going to.
6) More resources at hand: in addition to lower cost and larger audience base, virtual non-deal roadshows also come with the advantage of allowing management to have more personnel and resources available while they conduct the roadshow from their office. That way, management is able to better address investor questions in real-time instead of having to resort to “let me get back to you on that later”.
7) Build trust: roadshows are helpful in building trust between investors and management, especially for those who are located in different countries or even continents and may not see each other often. As convenient as emails and modern communications tools are, the human touch of being in the same room, shaking hands and conversing will always retain its value.
When was the last time your company did a non-deal roadshow?
Grayling New York has over 30 years of experience planning and executing hundreds of non-deal roadshows for issuers across market cap sizes and industries. In particular, we are experts at running roadshows for international companies seeking to access the U.S. or European capital markets. If your company needs help with your investor outreach or is getting ready to jumpstart your first non-deal roadshow, contact us now at firstname.lastname@example.org.