Corporate access — connecting corporate management teams with prospective investors — is vital to the health of every public company, as well as those with plans to one day enter the public markets. Reflecting on the events of 2023, the landscape of corporate access has been dynamic and vibrant. In this bustling environment, ICR’s Investor Access team takes a retrospective glance at the trends that shaped the year, offering valuable insights into the evolving dynamics. As we stand on the cusp of a new year, the team also casts its gaze forward, providing an informed perspective on the anticipated outlook for 2024.
Management access is still king
Access to management remains the foremost priority for investors. And while research is important, hedge funds allocate a significant portion of their resources to meet CEOs/CFOs and IROs. The trend of increased investor participation in conferences continues to surge, with 2023 poised to be one of the busiest years on record for corporate access activities. Conferences have grown and will continue to grow because they generate revenue for the sell side and are an effective way to connect with many people in a short period of time.
Virtual meeting trend ebbs
The virtual meeting trend, which gained momentum during the pandemic, appears to be in decline. Despite initial expectations of a hybrid model becoming the “new normal,” CorpAxe data indicates a decrease in virtual meetings from 20-30 percent in 2022 to around 13 percent in 2023.
Management needs to be very proactive to get the right meetings
It’s worth noting that some sell-side firms impose minimum commission thresholds on meeting requests. Ultimately this can limit the ability of investors, namely smaller, long-only firms, to request multiple meetings. Those are most often the very teams you should be meeting with.
What does this mean?
- Instead of solely accepting the broker schedule “as is,” take a proactive stance by inquiring about investors on the waitlist.
- If investors you’d typically see at a conference are not on the schedule, reach out directly to see if they plan to attend.
- Finally, if you don’t see an investor on your schedule with an office in the city where the conference is being held, carve some time out to meet. This could be the most productive meeting of the trip.
NDRs are still the most effective approach
While conferences continue to grow, many portfolio managers don’t travel. Therefore, non-deal roadshows (NDRs) remain the most effective tool to meet investors. As with conferences, the banks are driven by commissions, so be careful to check the meeting schedule — top commission payers aren’t always the best fit for a 1×1 meeting.
What’s in store for ‘24
Remember that the buy side also sees value in traveling to a company’s home office. While connectivity with the C-suite remains crucial, investors like to visit to meet senior leaders in charge of business units. Finally, corporate access with private companies has increased greatly this past year, nearing all-time highs.
- As conferences continue to grow in 2024, IROs and companies should consider the following:
- Are you meeting with investors you want to meet with?
- Does the schedule differ from conference to conference?
- Are you satisfied with how your schedule has shaped up?
- If key investors are not on your schedule, how can you directly connect with them?
- Take time after the conference to truly evaluate how productive the event was.
- Third-party calendars track actual participation. Buy-side teams closely observe which conferences management teams traditionally attend and when they conduct NDRs in particular cities.
Small and microcap land
Based on multiple conversations with asset managers, below $1B in market cap is becoming a challenge for institutional investors, with $500M market cap the lowest many of these funds will consider.
Buy-side conferences are growing
In addition to an increased number of sell side events, buy-side conferences will continue to grow. First Eagle, AllianceBernstein, and Columbia Threadneedle Investments will host an annual small and mid-cap investor summit each November.
What about Europe?
While NDRs are down in the U.S., European roadshows have declined rapidly over the past few years. Multiple brokers have shared that a comfortable minimum market cap to travel overseas for meetings is around $5B. If you plan to market overseas, you may have to be proactive with outreach to the investment community. Finally, hosting a prep call with an overseas investor you’ve never met may be beneficial.
In 2023, the corporate and investor access landscape experienced one of its most dynamic business years to date. The buy side sustained the proactive outreach strategies catalyzed by the pandemic, while the sell side responded to the challenge of identifying ideal non-deal roadshow days by significantly amplifying the number of conferences. As we venture into 2024, the resounding lesson underscores a clear imperative: triumph in corporate access requires the finesse of thoughtful curation and an unwavering commitment to prioritizing quality over quantity when cultivating connections with precisely the right investors.
If you’re interested in learning more about the ICR Investor Access program, get in touch.
