That's why a perception audit — an independent investigation into investor and analyst impressions of a company — can prove invaluable to corporate leaders.
A perception audit, generally conducted by a third party, involves collecting the anonymous opinions of current and former shareholders, potential investors, and analysts covering the sector.
What are the top challenges for this company?
What's the top reason you do or don't own the stock?
What's your view of the company's leading drug or product candidate? What other candidates in the pipeline look interesting?
If management could clarify one thing for investors, what should it be?
How could the company improve communications with the investment community?
What advice would you give management and the board?
Even if things are going well for a company, a perception audit can provide clarifying insights, giving leadership a great baseline understanding of how the market views their business — a starting point to benchmark and measure progress over time with subsequent audits.
A newly hired IR firm might want to conduct a perception audit to gain that baseline view and find out how investors and analysts compare your company to your peers, including a measure of the business's relative disclosure level.
An audit can be a first step toward uncovering ways to improve your investor relations plan, and can help management identify gaps and misperceptions in market views, guiding the company in altering its IR or communications strategies if necessary.
Significant events such as leadership changes, missed guidance, or a merger or acquisition may prompt a perception audit as well.
It's critical that investors and analysts provide candid, forthright answers, so an objective third party should handle the audit and give assurances that feedback will remain anonymous.
Management teams often assume they already know what analysts and investors will say about them, and that's not necessarily the case.
In most cases, certain themes become apparent after a few calls, as investors tend to agree on the key issues.
Leadership may find they need to attend more (or possibly fewer) conferences and non-deal road shows or that they use too many people at too many conferences and deliver inconsistent messages, or that they don't provide enough guidance or metrics relative to peers.
Whatever's wrong often is fairly obvious and readily fixable.
A thorough, carefully planned study can provide an appealing return on investment, helping you learn what resonates with the investment community and giving you vital guidance on improving and clarifying your messaging.
Have questions about conducting a perception audit? To learn how the Westwicke team, with more than 300 years of combined Wall Street experience, can help guide you to success with the investment community, get in touch.