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Financial Relations Financial Relations (sometimes called Investor Relations) - dissemination of information to a particular targeted audience, all somehow related to the promotion of a company's stock.
A proper PR campaign, both public and financial is usually customized to meet the specific needs of the client. A PR firm must know precisely how to capitalize upon both the media and investment community coverage it generates for its clients. While Public Relations and Financial Relations may seem to be a natural combination, few agencies offer expertise in both areas. Financial Relations is a very specialized area, requiring a knowledge of the field, expertise, numerous contacts, and prompt, detailed follow-through. Proper Financial PR relies on a vast network of contacts on Wall Street, the financial community and in the media nationwide. It requires tenacity and creativity. Communications must be cleverly crafted to warrant attention and demand results. Established relationships with local, regional and national news media must be in place. In addition, extensive experience in working with trade media in the areas of new product/service introduction and feature placement are required. Companies usually outsource their public and investor relations services to specialists which results in objective and professional consulting, realizing that if the job is done correctly, the dollars are well spent. Communicating effectively on this level requires expertise, contacts and, most importantly, time that management may not possess. With the use of a good PR firm the client company's management can be assured that necessary tasks will be executed efficiently and cost effectively, leaving management free to manage. Executives of public companies realize the importance of marketing their securities as well as their products and services, and Financial Relations becomes a critical function. Financial Relations is a requirement for public companies to meet certain SEC laws and regulations. It should be remembered that there are over 22 million investors or shareholders, most relying on a relatively small number of stock brokers and professional security analysts. The new public company is competing with over 7,000 actively traded, publicly held companies as well as perhaps 55,000 others that are technically public. When a brokerage firm contemplates taking a company public they are concerned about the company's ability to support the aftermarket after the underwriting. Financial Relations involve exposing the company to top Wall Street analysts and portfolio managers. The term "Wall Street" is used to denote the brokerage community in general, and it is necessary for the company and it's PR firm to maintain constant contact with any and all brokerage firms throughout the United States that may have an interest in the company's stock, and to continually introduce the company to new brokers. While a brokerage firm may not be making a market in the company stock at the present time, the object is to create new market-makers for the stock on an ongoing basis, while insuring that present market-makers continue to maintain activity in the stock. It is necessary to develop and maintain an extensive computer-based client mailing list that includes investment brokers and market-makers, analysts, portfolio managers, investment advisors, insiders, media, shareholders, and other key audiences and to design a communications program to reach these audiences with a clients story. A financial public relations firm can be used to assist the company in developing and implementing a program, but it is no substitute for management's full participation and commitment. Regular meetings with stock analysts and investment advisors, at the company's facilities, in New York, and other cities, are an important part of the program. A senior executive of the company, not necessarily the President, should be designated as the primary contact for the investment community. That individual, often the chief financial officer, needs to be knowledgeable, articulate, and should have the responsibility of the day to day contact with the financial community. Through Netscape, Compuserve and other InterNet services, stock quotations, real -time news, analysis, SEC filing information from services such Dow Jones, Bloomberg, Associated Press, Dun & Bradstreet, Moody's, Standard and Poor's, McGraw-Hill and other sources are accessed. If a company is contemplating a public offering, a strong PR program should commence about one year prior to the public issue. This may depend upon the status of the company as well as a variety of situations, but if possible, this would be the best scenario. Starting one year in advance helps to establish credibility and third party endorsements for the company. Another reason is to establish a clear and consistent pattern. Establishing a pattern of PR is especially important in the eyes of the SEC. If a heavy PR program starts one or two months prior to the offering, there is a possibility that the SEC might delay the offering on the basis that the company is purposely preconditioning an investment audience. A thorough knowledge of SEC law is important in a PR program, especially if the company is not yet public but intends to go public in the near future. All publicity should be stopped during the "quite period" prior to the public offering. The length of the "quite period" will depend on how quickly the SEC processes the registration statement. At "Due diligence" meetings, the company officers explain the company to underwriters and submit themselves to formal probing by the underwriters and their attorneys. These meetings can be held during the "quite period". It is extremely important to remember that any and all publicity pieces must be factual and timely, and, in most cases, must reveal the negative as well as the positive. This is especially important for the public company or the company contemplating an offering in the near future. The SEC could stop the offering, or demand the refund of all stock purchases. The SEC could also suspend trading of the company's stock. Full disclosure does not mean the local newspaper. It means sending the release to The Wall Street Journal, Dow Jones, a broad listing of trade and business magazines that have wide circulation in the financial community, and a reasonably wide distribution of the story to the security analysts of all companies that participated in the company's initial underwriting as well as all present marketmakers, and of course, to all shareholders. Also, it is important to know that officers of the public company should refrain from discussing important happenings such as dividends, mergers, etc. with individuals outside of the company without first releasing such information to the general public. Press releases of public companies are normally reviewed by the company legal counsel prior to release. Following are some of the primary components of a Financial PR program. 1. Communications Audit: A part of a PR program is to interview selected brokers, investors and others to determine how the client company is regarded by these groups. Their comments and suggestions are helpful in the initial stages of plan development. 2. Broker/Analyst Relations: The program involves initiating communications with current supporting brokers and analysts and work to develop interest among brokers and analysts not yet familiar with the client company. In addition, a PR firm will act as the primary contact for members of the investment community seeking updates on material events, and request management participation only when necessary. A system whereby inquiries from the investment community are processed in a timely and efficient manner should be established. In addition the PR firm will work with interested brokers to promote the company's story in publications designed to generate investor interest. 3. Road Shows: The PR firm can arrange due diligence road shows either in conjunction with public offerings or for informational purposes. The firm handles all aspects of the road show, including invitations, travel and facilities scheduling, arrangement of equipment, and follow-up. 4. Promotional Literature: The PR firm can create and distribute to the investment community a steady stream of investment-related literature, including fact sheets and corporate profiles. 5. Special Events: The PR firm's staff orchestrates the annual meeting from start to finish, including scheduling, audio-visual support and script writing. Listed below are some of the areas which may involve Financial Relations:
The Company recognizes the needs of its public clients with respect to the compliance and reporting requirements of the Securities and Exchange Commission and the NASD. While the Company cannot replace the client's legal counsel, the firm has extensive experience regarding a variety of disclosure issues and in many cases can assist a client in meeting its reporting requirements. The Company's services generally include matters related to compliance with the Securities Act of 1934, including:
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