Capital Markets / Investor Relations in Two Minutes or Less
Valuation: The Art of Framing the Pitch for Investors
Greg Maddux, Tom Glavine, John Smoltz, and for the devoted Braves fan Steve Avery, always seemed able to get a strike call on a pitch three to four inches off the outside corner of the plate.
How?
Pinpoint control and Javy Lopez, Damon Berryhill, and Eddie Perez framed the pitch for the umpire.
How Does an IRO Frame the Pitch?
My expertise is framing the pitch for investors, illustrated by three significant M&A transactions.
What Does My Process Entail?
Framing the pitch for investors starts with:
1. Reviewing the Investor Materials
2. Reviewing the Earnings Materials
3. Understanding / Learning the Business
4. Talk to the Buy-Side and Sell-Side
5. Identifying the Key Debates Facing the stock
Framing the pitch for investors means providing the:
1. Relevant Information,
2. Narrative Context, and
3. Financial Expectations Management
To simplify the company story and thesis, and make it accessible to a large number of investors.
For Investor Relations, valuation revolves around framing the pitch for investors rather than calculating multiples.
What Are the Tools IROs Have Available to Frame the Pitch?
Successfully framing the pitch to obtain optimal valuation revolves around optimizing the following levers available to an IRO
1. Listening to Investors and to Management:
Are you understanding the questions both asked and implied. Are you able to identify the good points of management answers and able to optimize or redirect what may not be landing with investors?
2. Investor Materials – the Investor Presentation:
Do you have an investor presentation that provides a simplified overview of the key qualitative and quantitative drivers of the business and allows an analyst to launch on your stock in a weekend?
3. Earnings Materials – Script, Release, and Presentation:
Are your materials all tied to the same message. Are these materials all tying back to the over-arching thesis presented in an Analyst Day or Investor Presentation?
4. Competitors and Associated Discussion:
Do you have a thoughtful narrative around the competition and industry environment? The more thoughtful your approach the greater the credibility you will earn from investors.
5. Frameworks for Key Debates Facing the Stock and Valuation Inputs:
Are you providing the right frameworks for investors to understand the key debates facing the stock and the key valuation inputs in order to take a position in the stock?
Simplifying and optimizing messaging across these five levers will result in a full and fair valuation over time.
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