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Art Communicating Value

Whether your organization is contemplating an IPO, just recently became a public company or is well-established on the trading floor, communicating your company’s value is critical to success. And, government regulations for accounting and corporate governance that have been established over the past few years demand that information be communicated faster, more accurately and with more transparency than ever before.

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Every company has a story to tell; the more concise, consistent, clear and energetic a company’s management communicates that story, the more investors and potential stakeholders will listen and understand.

The best way for both public and privately-held companies to communicate is through frequent and accurate communications that demonstrate they are on-track in meeting previously identified objectives, planning developments for the near future and, at least for public companies, explaining financial results.

That said, a healthy balance must be struck between putting out too few press releases and inundating the newswires with announcements that are of no value. Any news that is material—meaning that it contains information that would cause an investor to buy or sell stock or, with privately-held companies, potentially purchase or make an investment in the company—and is part of the company’s business plan and story is appropriate for a press release. Be careful however, not to mistake communicating often with “smoke and mirrors” press releases. Distributing press releases that contain information of little or no external value can and will seriously damage a company’s credibility and ability to attract investors.

If you remember three basic rules of communicating value, they are:

  • Be consistent in describing your company, its goals and objectives, and its achievements and financials
  • Maintain consistent, timely communications so that all parties interested in your company, including investors, potential stakeholders, financial analysts and the media can see how the company Is executing on challenges and opportunities. Even if it seems that there is no news to announce, identify something of interest to report that is taking place within the company to demonstrate that the company is executing on plan. Understand that silence is not necessarily golden. Investors often consider silence to mean that management is not doing its job.
  • Put each development in the context of your overall business strategy to demonstrate how individual events are advancing your overall strategic plan. Don’t shirk from discussing challenges that may arise but instead, position them as opportunities to show how they will be met and overcome. Also, communicating the difficulties with the successes helps build new confidence in the integrity and skill of the company’s executive team.

The way in which a company, private or public, communicates its essential components to a potential investor or purchaser is central to the price the individual will likely be willing to pay.  As such, to keep the company’s value and growth story prominent, well-constructed, frequent press releases that are clearly written without legalese or technology “geek speak” should be distributed over the newswires and then immediately sent to investors. The benefits of such press releases are twofold:

  • Each press release is an opportunity to reinforce the company’s plan and add a new chapter to the story.
  • Maintaining a continuous news flow maintains investor interest and can help generate a positive response to the company’s share price and liquidity.

Make sure to include a quote from management in the release—either the CEO, President, CFO or other relevant executive. The quote, which is probably the most important part of the release, can articulate the significance of the news event being announced and put it into context within the company’s business plan and strategy.

Also, don’t forget about using social media as another communications resource at your disposal.

Communications Around Quarterly Earnings Announcements

Company announcements on events such as new business wins or new product installations can be made right up to the date of the quarterly earnings announcement, as long as there are no implications that the win or installation had any impact on the quarter’s results. Remember that these types of announcements are crucial to demonstrating progress against a company’s long-term strategy.

Fair Disclosure a Must

Also, publicly traded companies should make sure that they aren’t selectively sharing information. According to Regulation Fair Disclosure enacted by the U.S. Securities and Exchange Commission (more commonly known as Reg FD), publicly traded companies cannot selectively disclose information to some investors before others.

Buy communicating consistently, ensuring organizational communications are timely and demonstrating how individual developments are supporting and advancing the overall strategic plan, companies can derive real value from what and how they communicate.