3 Smart Ways to Build and Maintain Investor Relations

From responding to investor queries and handling activist investors, to ensuring regulatory compliance, an investor relations team has a lot on their plate, especially these days. In fact, most publicly traded companies have changed the way they engage with their shareholders.

For instance, most companies now use investment banking software to track and manage investor communications from a single platform. Likewise, investor relationship management software often helps to capture digital signatures, ensure compliance, and share confidential information in a secure way. However, technology has also increased investor expectations. So, how can you build and manage investor relations in the current context? Here are some tips.

1. Understand the investor perspective

It is easy to assume investors are just looking for a high return on investment (ROI). However, not all investors are created equal. Some of them may want to know how you are planning to generate cash flow or how you’ll allocate the company’s financial resources (capital allocation). So, knowing what drives your investors is the first step. To that end, you should conduct perception audits or periodic meetings with your stakeholders. Consider using investment relationship management software to collate regular feedback from your investors and shareholders.

2. Build transparency with proactive communication 

Keeping your shareholders in the loop is paramount in maintaining investor relations. Before you implement a new policy change or take a new initiative, consider informing your investors and clearing up any of their doubts. For instance, before a major policy change, always explain why you are making the change, how the new initiative will create value, and what metrics you’ll use to measure progress. In order to maintain transparency and build trust with your investors, consider creating a system to communicate the right information at the right time. For instance, you can use investor relationship management software to send emails in bulk to your shareholders. You can also queue up your email communications in plenty of time. The right investment banking software also enables you to securely share confidential data with your investors, so they can evaluate fund performance more easily and accurately.

3. Deal smartly with shareholder activism

The key to tackling shareholder activism is to develop a good strategy for handling it before it happens. First things first, identify the root cause of the problem. It could be a miscommunication or a lack of communication, underperformance of the stock price, or a high paycheck for the board of directors. Once you identify the root cause, respond to the activist shareholders and give them clear explanations. It is always a good idea to engage in a dialogue before the problem grows bigger. Often, the problem intensifies when management refuses to talk to activists. Investors may have strong views against something, but it’s best to try and find a common ground. Finally, make sure you do your own research before engaging in a dialogue with investors. More specifically, keep yourself updated with the company’s current goals, metrics, and value drivers.