The Bright Side of Mifid II for SmallCap US Investor Relations
A recent post on IRMagazine.com discussed how, as a result of Mifid II, “US small caps said to eye paid-for research.”
“The impact of the regulation on our shores has been difficult to predict and remains somewhat uncertain,” Peter Sidoti, CEO at Sidoti & Company, tells IR Magazine. “For example, we are getting more inquiries about our company-sponsored research product from IROs and IR firms, as investor relations professionals are figuring out how best to advise management teams if they lose one or more research providers, as so many predict they will,” Sidoti explains.
According to Sidoti, Mifid II means IR professionals are set to become increasingly important to management.
IR professionals will need to have a difficult conversations with smallcap C-suite about bearing more responsibility when it come to investor relations. This means companies must commit to using their own human, monetary and marketing resources, to have their investment theses heard.
Sidoti continues, “IR budgets may need to be adjusted to account for an impending shift where the issuer, and not just the investor, compensates a broker-dealer for securities research coverage, investor conferences and other forms of access to buy-side clientele.”
“For most public companies, we believe the cost of doing this will be less than one half-penny per share on an after-tax basis,” Sidoti says. “IR professionals will need to relate to CEOs and CFOs that the benefits of investor access, and of credible securities research in terms of more informed valuations and potentially enhanced liquidity, are certainly worth the half-penny.”
Read the entire article on IRMagazine.com HERE.