Sick of the “New Normal?”

Written By Victoria Sivrais, Partner

March 4, 2021

Wrap Your Financial Narrative Around a Post-COVID Theme for 2021

The finish line for the year-end earnings cycle is rapidly approaching. There’s just enough time for a quick breath before starting first quarter earnings prep. If you’re tired of operating and communicating under a cloud of uncertainty (like we are), then use this “breather” to reassert your position. One great way to demonstrate a clear view of your organization’s future is to align your investor narrative with the current interests of thematic-oriented investors. While you’re at it, put some thought into re-imagining your targeting and engagement strategies, too. And approach 2021 with an emboldened IR strategy that will help drive the equity valuation your business deserves.

Thematic investors are not new to the scene, but they are testing new strategies.

Now’s a great time to get in front of investors with a longer-term mindset and a knack for identifying the macro themes that will be most important over the next several years. Some trends on their radar include:

  • Overlooked stocks that will benefit from the COVID-recovery cycle
  • Growth stories that continue to defy the odds of the COVID crisis
  • Strong cash flow generators getting a boost from sustainability megatrends

Can your company identify with any or all of the above? If the answer is yes, then it’s well worth the effort to thoughtfully consider how you can pivot your IR narrative to better align with these tending themes. Doing so will help position your company to more effectively engage with investors who are eager to align with companies that are poised for success.

Here are three ways to get your COVID-19 recovery narrative started now:

  1. Make a clear case for why your business is better positioned today than it was one year ago.
    • You’ve no doubt learned a lot about your organization’s resiliency over the past year. You’re most certainly leaner and nimbler today than you were 12 months ago. All of this should factor into your valuation.
    • It’s important that your financial narrative and investor communications incorporate the details about the evolution of your business in 2020. Discuss the changes you’ve made to fortify the company and highlight any top or bottom line results you’ve seen so far. Particularly focus on structural changes that will positively enhance your profitability going forward.
  2. Talk about your specific plans to drive growth. In detail.
    • Now more than ever, investors are looking for companies that are poised to take off. If you can, paint a picture of what your path forward looks like over the next several years—there’s nothing more attractive to thematic investors then a well-defined growth plan.
    • Talk specifically about the immediate opportunity in 2021 and how you will capitalize upon it in the near- and longer-term, giving as many details as you can:
      • Where in particular will you reinvest in the business?
      • Do you have plans for new product lines?
      • How are you energizing your M&A strategy?
      • What is the growth trajectory—slow at first with plans to ramp up rapidly?
    • The more specific you can be, the better thematic investors can understand—and ideally get behind—your plans.
  3. Make a big deal out of every deal.
    • If M&A is part of your path forward, define what the strategy looks like. Remember that your future transaction(s) does not need to be a mega-merger that lands above the fold in order to matter to today’s thematic investors. Indeed, communications around middle-market transactions are just as (if not more) important to get right.
    • Many times, middle market transactions are part of a broader strategy that includes a series of bolt-on acquisitions intended to collectively drive a company’s future growth. While less financially and operationally disruptive to a business, middle market deals often serve as strong proof points for the execution of a strategy. Don’t overlook the opportunity to share the details of these future transactions with your potential investors.

Go for growth in 2021.

While the last year has held growth stories on the sidelines, more and more companies are ready to talk about the future in much more certain terms. We’re seeing longer term strategies creep back into investment narratives—and that’s a welcome and good thing for many investors. Those companies that are telling their stories well and in detail are seeing thematic investors come back into the stock.

So, if you are ready to share your future plans, know that the Street is listening. Speak up if you think your company is undervalued. Don’t be afraid to overcommunicate and layer on the details. And above all else, be bold with your IR strategy. Investors are ready for businesses that are ready to take action.

Contact us to learn more about how we can be a valuable partner.

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