At some point during your company’s growth, you will need to share sensitive data with investors and financial professionals by using a data room. In the old days, a data room was just that: a room filled with printed files and reams of paper containing patent descriptions, clinical data, and financial projections.
Today, data rooms are usually virtual. And with hackers increasing their efforts (and their ability) to steal sensitive data, it’s vital you consider security as well as service and convenience as you evaluate data room solutions.
A lunch meeting with an investor provides the opportunity to interact in a more relaxed atmosphere than what you’ll find in typical investor meetings. It’s a chance to build rapport and get to know the investor better. It’s also a nice opportunity to strengthen your investment thesis by providing color and anecdotes supporting your strategic initiatives.
But just because it’s not a conventional business meeting doesn’t mean it’s risk-free. On the contrary, whether it’s with a potential new investor or an update with an existing investor, these informal situations include plenty of opportunities to make costly mistakes.
I have always found it interesting to discover what is on people’s minds in the moment and to delve into what keeps them up at night. So, I thought it would be useful to share the questions I have received recently from a mix of public and private biotech management teams, along with my responses.
Recently, we hosted a luncheon discussion, led by the Healthcare Investment Banking group at Wells Fargo Securities, with executives from several life science companies. The primary topic was the outlook for Life Science Capital Markets in 2017. Geoffrey Goodman, Managing Director of Equity Capital Markets at Wells Fargo, and Filippo Petti, Vice President of Healthcare Investment Banking at Wells Fargo, led the discussion.
Below are our key takeaways from the discussion.
With our colleagues at NASDAQ, we recently co-hosted an informational luncheon for private-company CEOs and CFOs on the IPO process. Guest speakers included a life science venture capital investor and a CFO of a company that went public in 2016.
The management teams in the audience for the well-attended event had plenty of questions for our guests, on everything from how to prepare for an IPO to avoiding pitfalls to making the transition to being a public company.
Our speakers had much to say. Below are a few of their most important pieces of advice:
Dining with one of your analysts can be nerve-racking, but it really doesn’t need to be.
Sharing a meal at a restaurant should make for a less formal meeting than one conducted in a boardroom. The mood should prove to be friendlier and less business-like, and conversations rarely venture deep into the numbers.
Over dinner, analysts frequently probe for “color” related to previously disclosed themes to gather the kind of details that can animate their coverage and talking points for investors.
In the 30-40 minutes that a typical investor meeting lasts, you need to accomplish several critically important goals. You must:
• Provide your audience with the investment merits of your company
• Answer their questions
• Inspire them to do more research into your market opportunity
If you fail to achieve these objectives, if the investor leaves the meeting without sufficient information and inspiration, then you’ve effectively wasted everyone’s time, including your own.
When it comes to dealing with investors and analysts, what you say can be every bit as important as what you do.
Effective communication can burnish your company’s image and help drive interest in your shares. Conversely, ineffective communication can undermine your reputation and distort even the strongest of investment stories.
To improve the likelihood that you’ll get your communication with investors and analysts right, let’s review some proven do’s and don’ts.
In the film “Peter’s Friends,” Rita Rudner’s character, the star of a fictional sitcom, turns to her husband at the airport and laments, “You know what I hate about being a public figure? The public.”
I’m sure many executives running public companies have shared a similar sentiment from time to time.
The good news is that, alongside your trusted investor relations counsel, there is a group of professionals who can act as a barrier between you and the mass of institutional and private investors, namely sell-side research analysts.
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.