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Jun 11, 2020

Ten lessons for dealing with investors in a crisis

Mark Merson, founding partner of banking consultancy Veritum Partners, who was head of IR at Barclays during the financial crisis, offers the following advice on investor communications during a crisis

1. We are in a crisis – and normal rules of crisis management apply. This crisis is different from the last, almost by definition, and requires its own determined response.

2. Leaders are visible in a crisis, whether or not they like it and whether or not they are the people with leadership titles. If the company’s leaders themselves are not visible, people will likely take note of other leaders instead. Management teams need to work hard to be the drivers of the narrative, as it can quickly get out of their control.

3. Do not cancel investor meetings. By all means make them calls or videoconferences to respond to investors’ needs and other constraints, but keep commitments that have been made. To the outside world a canceled meeting can be extrapolated into a story – a negative story.

4. Communicate often and clearly, not just when there is something new. Providing business-as-usual communication is not enough. Being available to take calls is also not enough. Company senior management and IR teams need to find ways to be present with the investor community, especially because normal investor meetings are not available.

5. Make communication relevant to the moment. To an investor seeing a red screen, it is not necessarily reassuring or interesting to know that the previously communicated strategy is intact. Be prepared to discuss operational matters rather than the most recent financials. Make these operational matters the first part of your investor communications, rather than just the responses to questions.

6. Plan quarterly statements in advance. Consider reordering to focus on defensive characteristics such as risk management, liquidity and balance sheet strengths.

7. Avoid predicting the future. With things changing quickly, predictions will likely quickly be stale or hostages to fortune.

8. Make sure you are very well informed. Pay close attention to news flow on market peers and to the detail of peers’ market statements. Reading the headlines is nowhere near enough for the level of credibility that influential company representatives need to command in order to stay relevant.

9. Pace yourself – this already looks like we’re in it for the long haul. Set a working pace that both you and your team can sustain for the long term.

10. Be prepared for when the world turns. At some point, the market will once again be ready to listen to management plans for brighter futures, and there is value in knowing what you might want to say at that point.

This is an extract from an article that appeared in the Summer 2020 issue of IR Magazine. To continue reading, click here to open the full digital edition of IR Magazine