Movers and SHAKERS
Self-Directed Investors Get Unexpected Benefit from Lockdown
The advantages of virtual roadshows and other virtual investor relations events are greater than anyone would have guessed prior to Covid-19. These events offer a high degree of flexibility, lower costs for all involved, allows for increased frequency of meetings, and much broader inclusion. With all the benefits, these virtual events should remain a staple of the business world long after the virus risk has passed.
Up until earlier this year, executives regularly made the rounds traveling to major financial centers telling their corporations’ stories to potential investors. In order to get the most from their valuable time and travel costs, the number of cities visited was necessarily limited. The typical roadshow stops may have included New York and Boston on the East Coast, Chicago in the Midwest, and Los Angeles and San Francisco on the West Coast. The stops would never include small towns inside or outside the U.S. Now they present everyplace there is an internet connection, including your living room or mine, regardless of where we live. They can be attended by investors of any level that are interested. This is clearly positive for the presenting executive, but it is also a big win for the out-of-the-way professional asset manager – and also the self-directed investors who never would have been able to listen and ask questions of management before.
Management can now be far more productive under the new process, where they’re no longer balancing travel and logistical issues. They can focus more on virtual meetings and interacting with investors from around the world. And since time is conserved by reporting from their home or office rather than catching planes from one meeting to the next, far more interactions can be had in fewer days. What’s more, the Interactions are often with people they would never have benefitted from meeting with in the past.
Two executives traveling from the East Coast to the West Coast for a week of meetings could cost $10,000 or more. This takes into account flights, hotels, car rides, and restaurants. For the management of firms who regularly meet with investors, the cost adds up over the year. Under the new virtual roadshow model, the dollars that were wasted can now be more productive by going toward company-sponsored research or other priorities in the IR budget.
The cost of time out of the office is less of an exact measure, but could even be higher than what is spent on travel. Additionally, the time an executive is not away from home and family is also an intangible benefit. Time in transit can now be used toward more productive purposes at the company, with customers, or simply to rest and recharge.
The pandemic has proven the importance for public companies to have a disaster recovery plan-B for investor communications. Companies that had existing virtual capabilities in place or those that pivoted to them quickly have benefited from maintaining "face-to-face" contact during a period of heightened investor uncertainty.
Virtual roadshows are likely to remain the dominant means of meeting investors in-person, while traditional meetings are likely to be left for special circumstances. Both investors and executives understand the benefits of engaging in this way.
The need for management to maintain uninterrupted communications with investors has never been stronger as we manage through unprecedented disruption of businesses. The advantages to open communication is obvious. Executives can meet with more investors while their resources, including time and money, can be redeployed for greater gain. Companies waiting for conditions to change rather than adopting this technology or partnering with a firm that offers it are falling behind.
Investors, particularly those outside of the normal roadshow or conference centers, and self-directed investors that never received attention from management are the big winners. Virtual financial events place them on a more level playing field. This creates a situation where investors, companies, and the overall market is benefitting.
Enjoy Premium Channelchek Content at No Cost