Strategy & Insight

Cap-size research: No small numbers

Investigating the source of small-cap companies’ biggest challenges.

Around 18 months ago I attended the IR Magazine winter think tank in London. One of the sessions addressed the issue of dealing with sell-side analysts, and much of the conversation focused on having too many analysts and whether the market could be better informed about a company if that firm had fewer analysts covering it.

I remember thinking at the time how alien this conversation would sound to IROs at small-cap companies: for many of them, the very idea of having too many analysts covering their company would sound like a particularly luxurious problem.

How best to deal with the level of analyst coverage is a very genuine challenge for companies of all shapes and sizes. But the issue does serve to illustrate just how different the job of IRO can be at a small-cap company and a larger company. In the three years we have been regularly surveying IR practitioners, it is this issue more than any other that has consistently cropped up in our research.

In this section we draw upon our previous research to show the extent to which the practices, priorities and sentiments differ between IR departments at small-cap companies and other cap sizes. We will also show that, while the issue of IR resources is very important, it is often the very fact of being at a small-cap company rather than the resources available that makes the job so different.

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