Should MicroCap Companies Have an External IR Firm, Someone Internal, or Both?
Rob Fink – Hayden IR:
“Larger companies with coverage from several analysts can certainly benefit from an in-house IR program. Most companies seeking to achieve or maintain a fair valuation can benefit significantly from outsourced IR firm. Micro-cap and small-cap companies, in particular, will benefit from a strategic, ethical and focused outsourced IR relationship. Smaller companies face tremendous competition for attention from a relatively small audience of potential investors, and challenges such as volatility, illiquidity, and a lack of research coverage heavily impact the potential audience for these organizations. A good IR firm that has strong buy- and sell-side relationships, a track record of implementing best practice IR efforts for companies with similar profiles can help smaller companies reach appropriate investors who have the interest and the ability to build a meaningful position in a company at every step of its evolution. Hayden IR has had great success working with clients that have an in-house IR team and we have added significant incremental value to enhance and expand existing efforts. We have found these arrangements to be well-organized and efficient, organizing analysts, non-deal road shows, internal communications and conference presentations. However, it is important to note that the CEO and CFO must be actively involved in any successful IR effort, and usually, the Board of Directors must play a role in driving a successful campaign.”
Jeffrey Goldberger – KCSA:
“The need for investor relations departments increased with the passing of the Sarbanes Oxley Act, which required increased corporate governance and regulatory compliance for public companies. While most companies whose market caps range from mid to mega-cap have internal investor relations departments, it is often not economical for companies of smaller size to absorb this expense and therefore opt to work with external agency investor relations firms. All public companies that report to the SEC should have an internal employee dedicated to investor relations, but depending on the degree of services required, an issuer may find it vital to hire an investor relations agency to implement a successful investor relations program.”
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