The wider aim of an IR program should be to provide investors and other stakeholder audiences with a clear, honest and accurate picture of the company's past performance as well as its prospects for the future. The latter point is very important as investors are interested in strategic and operational information that will help them predict how the company might perform going forward. Feedback from the market, particularly investors, should also help the company to formulate its own strategy and facilitate its delivery.
Our successful IR program is designed to achieve:
- A substantial increase in the shareholder base
- Easier and lower cost access to capital in future
- A loyal group of investing supporters that believe in the vision of the company
Some Management teams new to the market make the mistake of thinking that the aim of the IR function is to maximize the share price at all costs. This is not the case and unfortunately it tends to lead to false expectations that the company cannot fulfill. Consequently the stock tends to be punished severely, resulting in a struggle to rebuild investors’ trust in the Management and the company as a whole.
Just as an unjustifiably high rating leads to problems, too low a rating can also lead to difficulties, particularly when it comes to raising finance in the future or increased vulnerability to takeovers. Most often when the share price remains cheap for extended periods however, it is due to misunderstood or poor fundamentals and a lack of consistent, track record building information being provided by the company to the market. It is always better to aim for a "fair market valuation" that correctly reflects the company's circumstances and its likely longer term value.