Improve M&A success

Improve M&A success with these strategies.

The essential in any strategic initiative – is careful planning. Unfortunately, mergers and acquisitions often develop so rapidly that time for preparation is limited. This is why one of the mainstays of investor relations is an ongoing program of skillful relationship building with a company’s key stakeholders. Management teams that stay in touch with their priority constituencies, including institutional shareholders, will be in a better position to understand, in advance, the different mindsets these interests will bring to an impending deal.

In addition to keeping your shareholders updated on company developments, management should obtain feedback from your top 25 shareholders on issues that matter. How do your institutional holders feel about M&A as an element in your company’s growth strategy? Are they more concerned about dilution or debt? Do they require all deals to be immediately accretive? How does their thinking about industry consolidation align with yours? Do they have concerns about your management team’s M&A experience? A comprehensive third-party perception audit of your investor base can help answer these questions.

Develop Your Strategy

Armed with this insight, the company can develop an effective M&A messaging strategy. From the announcement of a deal through the closing, this strategy should be aimed at two outcomes. The first is to support successful completion of the deal. The second is to ensure that, whether the deal goes through or not, your company will emerge from the process with even stronger positioning on Wall Street.

Messaging based on an understanding of your shareholders’ perceptions and concerns can convert them into advocates for the deal. Current shareholders will want to know how the transaction benefits them. Assess the transaction through their eyes, particularly when dilution is involved. Whether a deal is strategic or tactical is often crucial in determining how much dilution Wall Street will support. Are you acquiring the target for its products, its technology platform, its customers or the geography of its operations? An explanation of expected synergies and long-term benefits can help offset dilution concerns.

Consider Contingencies

Sound planning for M&A communications always considers “what if” scenarios. Chief among them: What if the deal fails to close? It is imperative to communicate that, as attractive as the deal may be, it is by no means your company’s sole option for achieving its long-term goals.

Successful M&A messaging also must reflect the perceptions of stakeholders on the other side of the deal. (Value is in the eyes of the beholder.) Both companies will emphasize that they are getting the best possible price, but they may come from opposite directions in the reasoning and messaging. Your success in M&A communications can hinge on the ability to mediate the contradictory nature of the messaging on opposite sides of the transaction.

Negotiate the Outcome

It often can take as much diplomacy to coordinate messaging strategy as to reach agreement on deal terms. The best M&A communication outcomes result from both parties clearly understanding their respective roles, as well as their IR messaging objectives. Coordinated planning also is crucial. It is imperative for each company to be systematic in maintaining open communications with its institutional shareholders – and to get in touch with these constituents immediately after the transaction is announced.

Overnight, the management teams on both sides of the deal will find themselves encountering new universes of shareholders, often with very different investment objectives and horizons. As closing approaches, the acquiring company should become thoroughly familiar with the target’s shareholder base and be prepared for the necessary outreach once the deal is complete. This should include personal phone calls to welcome inherited shareholders or outgoing e-mails with IR contact information. These actions engender goodwill and can make a lasting positive impression.

Cultivate Broad Support

Although CFOs and investor relations officers tend to bear the primary responsibility for spearheading M&A communications, the scope of the effort must extend beyond these functions. Senior management should assemble an internal task force that also consists of the legal department, corporate communications, HR and the business unit where the acquisition will reside. Working together, these groups can cover the entire range of external and internal constituencies.

Too often, communications with non-financial stakeholders get short shrift from management during the frenzy of activity surrounding a deal. Employees will be asking: Will I have a job? What will happen to my pay and benefits? What are the implications for my career, my lifestyle and my security? Customers and suppliers will have their own sets of questions about the transaction and its potential impact on their business relationships with both companies involved.

Coordinate the Details

In addition to crafting messages that respond to these questions, a number of logistical communications issues will need to be addressed. For example, will both companies conduct a joint conference call when announcing the transaction? If so, which members of the executive teams will participate in the call? If each company is conducting its own conference call, answers to potential analyst and media questions should be carefully scripted and rehearsed to ensure consistency.

If the current trend is any indication, M&A communications will be an important tool this year for companies and their executive teams. Communicating effectively before and throughout the M&A process will enhance relationships with all constituencies and possibly even enable a more successful transaction. Learn More:

We help company’s structure and communicate their message to Wall Street through a combination of old school practices and the latest media and marketing methods. Having extensive experience as past stock brokers in the early eighties, the principles of OTC PR Group are equipped to approach analysts, brokers and portfolio managers in the language they understand. We communicate directly with investment professionals understanding their goals, attention, and the type of companies they look for.

We strive to find stories that resonate well with our networks and with our direct communication practices our clients get their attention.

Investment professionals such as: stockbrokers, registered investment advisors (RIAs), certified financial planners (CFPs) don’t have the time to research the thousands of OTC companies that currently trade. If you don’t have an experienced professional speaking with them directly about your story, they will never know you exist.

Our approach is centered around properly educating Investment professionals and cultivating trust in order to uphold and protect management’s long-term credibility and reputation on Wall Street. Our company was founded on a strategic and professional approach to corporate relations that builds awareness of our clients through tailored outreach programs that target institutional investors, analysts and the financial media.

The OTC PR Group model employs a variety of conventional and non-conventional programs and tools to communicate your company’s story and increase your exposure in the small-cap equity markets. We pride ourselves on the honest and unfiltered feedback we gather from the brokerage community and we use this feedback to constantly evolve the messaging.

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Raising Capital

The pace at which your company develops – and even your ultimate success – can hinge on your availability of capital. Learn these basic rules of raising capital. Our experience has shown that a properly coordinated out reach program can attract attention and increase awareness.

There are over 100,000 publicly traded companies in the world. In the US, less than 4000 companies are actively traded in NYSE or Nasdaq. There are another 15000 stocks that are traded over the counter. The majority of them are thinly traded. When the time comes to make an investment, stockbrokers and investors alike are swamped with decisions, choices and alternatives. Your company is lost in the shuffle – just another needle in the haystack, unless brokers and investors are familiar with your company’s name and business. The only way to build that familiarity is to put your company’s name, story and pertinent information in front of targeted brokers as often as possible. A well-organized, professional Investor Relations Firms and Broker Network Programs can help build the familiarity your company needs in order to get its share of attention in today’s competitive markets and increase the liquidity in your company stock.

Angel investing in start-ups has been accelerating with many high-profile success stories that have spurred angel investors to make multiple bets with the hopes of getting outsized returns. Many angel investors may not be as wealthy as you think but they are financially savvy. Most are looking for a way to grow their money by promoting innovative new business.

In today’s business climate, there are literally hundreds of ways to fundraise.

Here are some basic rules to keep you on the right road to raising capital.

1. Establish clear, realistic goals. From day one, clearly state your objective. If you can’t explain your vision in concrete terms to potential investors, you can’t expect them to give you their money.
Be realistic about what you are trying to accomplish. By laying out your plan in detail, you should be able to say with confidence what you can expect to accomplish. Investors deserve transparency and truth. Your partnership must be based on trust — and only credibility can breed it. Making a good impression with a solid pitch presentation is important, but it won’t guarantee funding. Credibility invokes confidence, which mitigates risk and opens wallets.

2. Have a solid team in place. Any startup is only as good as its people. A strong, efficient and success-driven team is absolutely necessary. Your team represents the company, its goals, its vision and credibility. Recruiting people with sound reputations for honesty and integrity helps attract investments. After all, you are your team.

3. Focus on the “real” market. Exhaustive, in-depth market research is the only way to map a blueprint for success. Many early stage businesses are too eager to get started and end up setting out in the wrong market. The best market for a new business is not always the biggest or the steadiest. You have to do your homework. There is no replacement for in-depth market research.
You and your startup team should profile a variety of markets. That is the only way to determine which one is the best fit for your business. Market research can be tedious, but it is the bedrock of a solid business plan.

4. Get your name out there. The biggest irony in raising capital? You need some capital to do it. Investors won’t know every detail about your project, so you have to decide what essential information to deliver. Fortunately, the Internet is the best advertising medium invented, and it’s always open for new business.
The web is without a doubt the most powerful place to advertise. Even better, it’s cheaper than broadcast TV, radio or print media. Social media can also be a real boon, as solid networking can help you connect directly with potential investors. That’s how you create the support network for your project.

5. Consider crowdfunding for validation. Crowdfunding is one of the best fundraising tools available for startups today. The concept is simple: You advertise your business idea in a number of difference dedicated platforms and users vote with their wallets. A crowdfunding pitch can also be a good litmus test. If you don’t attract investors (or interested customers), you should consider tweaking your pitch or your business model.

Raising capital can be a very time-consuming process and it will always take longer to raise angel financing than you expect.
Not only do you have to find the right investors who are interested in your sector you have to go through meetings, due diligence, negotiations on terms, and more. There are a variety of ways to find angel investors, including through:
• AngelList
• Angel investor networks (groups that aggregate individual investors)
• Venture capitalists and investment bankers
• Crowdfunding sites like Kickstarter and Indiegogo

After finding investors you should determine whether a prospective angel is a good fit for your company, questions you should ask:
• How do you like to help your portfolio companies?
• What amount of follow-on investment do you think our company will need to succeed?
• How do you think you can be helpful to us in growing the business?
• How do you like to interact with your portfolio companies?

Angels will often invest in the company through a convertible note. They key terms negotiated are:
• Unsecured or secured on the assets of the company – this is almost always unsecured.
• Interest rate and payment – the interest is usually accrued and not paid currently.
• Discount rate – this is the discount rate the investors enjoy for taking the early risk in the company, expressed as a discount from the company’s Series A round of financing. A discount rate of 20 percent is typical.
• Valuation cap – this is the maximum valuation of the company where the note can be converted in the next round of financing.

We specialize in targeting qualified stockbrokers and investors who are actively seeking small cap investment opportunities. Our investor relations firm clientele are Public Companies, like you who are making a real effort to broaden their retail stockbroker and shareholder base with Real Retail Buying?

OTC PR Group can reach qualified and targeted stockbrokers for your company. Our experience has shown that a properly coordinated out reach program can attract attention and increase awareness. We have integrity and a high-quality database of stockbrokers and VC Groups who we are able to target for your company. Learn More:

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Tools we use TO SUCCESSFULLY USE SOCIAL MEDIA FOR INVESTOR COMMUNICATIONS”

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Delivering messages that gain analyst coverage

Delivering messages that gain analyst coverage is what good Investor relation professionals do when creating proactive strategies for building long-term, engaged relationships with shareholders.

Investor relation professionals also need to proactively communicate the right message to the right investor, which starts with understanding that investor’s decision-making criteria. Due to fundamental changes in the brokerage industry and sell-side, many companies, especially smaller and medium-sized businesses — are struggling to attract or maintain analyst coverage.

Investor relation professionals can no longer rely on analysts to regularly report on their business. With diminishing coverage, investor targeting has become a critical function for Investor relation professionals.

It’s key to understand how the function of corporate access plays into your meeting schedule and to push for the most strategic meetings. There is no substitute preparation and strategy when it comes to seeking and maintaining investors.

Investor relation professionals also need to proactively communicate the right message to the right investor, which starts with understanding that investor’s decision-making criteria. Investor relation professionals need to ensure they get their message out to investors and get an early read on anything that may be creeping up on them, including activist intentions.

The 2008 financial crisis was a watershed moment. The aftermath exposed many problems within the industry, including a growing disconnect between some management teams and their investors.

Companies started receiving poor scores regarding executive compensation from mutual and index funds which was followed by a wave of activist campaigns and proxy fights. Investors are changing the way they classify companies; peer groups are evolving to take rapidly changing conditions or investment strategies into consideration.

Say, for instance, a company increases its dividend from 2% to 4%. This company would then be perceived as part of a ‘synthetic basket’ of stocks made up of companies that have drastically increased their capital return programs.

Investor relation professionals need to be aware of these types of emerging investment strategies such as Socially Responsible Investing (SRI) which is becoming more meaningful to investors. Shareholders are increasingly making decisions around investments and divestments based on socially or environmentally responsible factors.

Peer group considerations and SRI represent just two of the growing types of ‘thematic’ investor characteristics (another example is passive investors) that companies need to monitor and engage with. As a result, it’s no longer effective to focus solely on factors such as assets under management or specific sectors.

Investor relation professionals need a broader view of investor characteristics and tendencies that they can’t get from traditional peer analysis. This could mean identifying ideal investors in entirely new ways. A savvy IR professional will want to adjust his or her company’s story and targeting program to account for these trending themes.

With growing business and market complexity, the role of investor relations has evolved to become more strategic.

The typical Investor relation professional is now tasked with helping the company’s board members understand the way investors perceive business strategies and developing a more engaged shareholder community based on long-term relationships. In some cases, companies are increasingly turning to perception studies to better understand their vulnerabilities and develop a stronger offense.

Delivering messages that gain analyst coverage is crucial to help bridge the gap left by the changing broker model and to compete for coverage with the remaining sell-side analysts and the increasingly influential buy-side analysts, Investor relation professionals require more advanced data sets to provide them with insight into their company, industry, peers and prospective investors.

It’s clear that the era of the Investor relation professionals focusing on reactive communications is long gone. Instead, the modern Investor relation professional is creating proactive strategies for building long-term, engaged relationships with their shareholders. As they do so, the insights that Investor relation professionals provide are becoming a critical part of board-level conversations.

OTC PR Group provides a full suite of small cap public relations services utilizing the latest technologies coupled with relationship building processes to develop and maintain interest from your shareholder base.

We work to build shareholder value by engaging with key-stakeholders and effectively following up and communicating your message, investment potential and corporate vision to investors, Brokers and the media.