Throughout my 23 years as an institutional salesperson, I had the pleasure to host many interesting and successful investor meetings.
Very few of those meetings went badly, because I always made a point to educate the companies I was traveling with in advance of the meeting. My goal was to make sure the management team had a complete background on the investor they were meeting and a deep understanding of that investor’s investment process and philosophy. I even tried to ensure that the management team knew about any investor’s personality quirks so they would not get thrown off their game during the meeting. Investors can sometimes try to intentionally rattle management teams in order to get them to say things they were not planning to say.
Thorough preparation is the best way to ensure investor meetings go smoothly. I asked my colleagues to offer their own thoughts on this subject, and to share some of their most cringe-worthy stories of meetings that did not go as planned. Enjoy.
Always Maintain Professional Decorum
Investor meetings are typically scheduled back-to-back-to-back. This makes the process grueling for management teams and investors alike, especially at conferences. Add in some jetlag from traveling to and from a conference and it’s not unheard of for an investor to fall asleep during a meeting with a company. How, then, should you act if the investor you’re meeting with dozes off – or worse, starts snoring?
The answer: be professional. There is no point in getting annoyed – you could still have a mutually beneficial relationship with this investor when they regain consciousness – but there is also no point wasting your time by continuing your presentation. The best solution for all involved is to stop, inquire if the investor is OK, and politely suggest that you reschedule the meeting for another time. If you can’t wake them using your voice, nudge them a little and, with good humor, suggest you reconvene.
– Laurence Watts, Principal
I had a meeting go awry when a CEO, who had a bit too much swagger apparently, decided during a meeting to throw his structured computer bag up onto the meeting table. That is probably OK in some circumstances, but this was a large, very expensive table made of gorgeous wood in a private home office. When the CEO was packing up, he pulled the bag to the ground, scratching the table! The investor noticed, and was distressed: “You scratched my table!” The CEO was apologetic and sent flowers the next day, but we never got another meeting. I wonder if that investor looks at that table and thinks bad things about that company to this day.
Bottom line: Maintain decorum even when you are (or think you are) the big cheese. Sloppy manners never impress.
– Caroline Corner, Managing Director
If Investors Want to Vent, Let Them
I’ve had meetings go sideways when an investor is frustrated because he’s underwater in the company’s stock and is looking to vent. Like it or not, your meeting is the opportune time, in his opinion, to air any and all grievances. I know it’s easier to say than it is to do, but don’t take it personally and hear the investor out. It is often the case that once everything is off his chest, the meeting, and the relationship, are able to proceed much more amicably.
– Asher Dewhurst, Principal
Be Honest and Consistent
One-on-one meetings between science-savvy investors and company management teams, particularly in biotech, can be brutal. The CEO, or more often a CFO without a strong scientific background, may not be able to fully explain a mechanism of action for an immune therapy in oncology, or the intricacies of the statistical analysis of a clinical trial. I have heard horror stories on this topic from investors.
Rather than try to get through a deeply scientific interrogation-style investor meeting and potentially blow your credibility, remember you can always take a step back and say, “I am not sure of the answer to your question. Let me check with our chief scientific officer and we will get back to you.” Investors can smell a bluff from a mile away and will remember it for a long time. Afterwards, they will tend to view you and your company with a greater level of skepticism and a “show-me” attitude. Who needs more of that? Don’t let yourself get into that predicament. Following up in a timely manner with the complete answer is always appreciated.
– Robert Uhl, Managing Director
When I was on the buy side I had the chance to meet some very interesting companies doing some pretty amazing things. That being said, one thing that always turned me off in a meeting was when a management team would say outlandish things. One of my favorites was “If we get just 5% of market XYZ, we will have a billion-dollar product.” Now, in fairness, while a “top-down” analysis like this may ultimately prove to be correct, the simplicity of the math and analysis is what is outlandish. Make sure you always use a thoughtful “bottom-up” approach when making a statement about the expectation for a product. Use your meeting to show investors the depth of your expertise and knowledge about the market you are selling products or services into.
– Chris Brinzey, Managing Director
Investors’ questions will usually focus on issues related to recently reported results and the supporting commentary that management shared on the latest earnings call. I’ve had meetings go awry when management’s answers are not consistent with recent public commentary.
When the new commentary appears more bearish, investors will assume the trends in your business have deteriorated and will focus questions around what has changed as they evaluate the risk of future guidance coming down. When the commentary seems more positive, near-term stock performance will likely benefit from the stronger investor sentiment, but longer-term it may weigh on management’s credibility with respect to “sand-bagging” guidance.
Neither of these scenarios is good for valuation multiples.
– Mike Piccinino, Managing Director
Be Careful When Discussing Competitors
One biotech management team that I know of was in a meeting with an investor who was apparently more interested in a competing company. The investor continued to ask management about the competitor product. Unfortunately, the management team, trying to be helpful to the investor, failed to turn the conversation back to its own product and its advantages.
– John Woolford, Managing Director
When I was on the sell side, a company management bashed a competitor’s product during a meeting – only to find out that the investor they were meeting with was on the board of the competitive company. Lesson learned: Do your homework prior to the meeting.
– Patti Bank, Managing Director
When you’re meeting with investors, almost anything can happen – and almost everything has. But if you prepare thoroughly and maintain professionalism no matter what, you’ll find that little or anything can unnerve you. For a deeper conversation about tactics for finding new investors and managing your existing investor relationships, feel free to get in touch.