And some companies even offer hybrid roles such as Treasury and Investor Relations, where you split your time between each area. In this article, we will focus on IR roles at normal companies because the ones at investment firms are so different that they should be in a separate category. At smaller companies, IR is less specialized, so there is often more overlap with the corporate finance team and the rest of the company.
You need to understand accounting, financial modeling , and valuation, such as how your company stacks up to comparable public companies , but you do not necessarily build models or complete those tasks yourself. You start updating the standard quarterly presentation to include these new figures. The main theme here is that the job is more about understanding the financial statements and valuation concepts like the DCF rather than doing the modeling work.
The hierarchy in investor relations tends to be compressed relative to the investment banking and private equity career paths , and the names vary quite a bit.
To advance, you need to make the executives happy with your performance and build good relationships with institutional investors. If you work in investor relations at a normal company, your compensation will consist of a base salary , cash bonus , and equity. These numbers, plus a bit of rounding, imply the following total compensation ranges:. At smaller firms, expect lower base salaries, lower cash bonus percentages, and higher equity percentages.
Investor relations teams and firms also need to be well-versed in different regulatory requirements regarding disclosure of financially-relevant events such as:. The best time to engage an investor relations firm and start to build out an investor relations team is the moment a company considers going public as a corporation with an initial public offering, or IPO. As companies establish and refine corporate governance around financial disclosure, investor relations teams should be codifying governance outcomes and preparing them for eventual release.
When companies conduct internal financial audits, investor relations teams should be involved in the discovery process so that any unpleasant findings can be handled and disclosed in compliance with regulations.
When material changes. The new IRO role needs to shift from simply explaining corporate strategy and practices to laying out why the strategy is best positioned to unlock shareholder value and therefore attract and keep long-term investors. In other words, the role has to add more value to the corporation.
Intelligence gathering: At the same time, the role needs to shift away from one where the IRO merely keeps track of what investors are saying. Instead, the new IRO must become an intelligence agent who has identified the hot-button issues investors care about. Are they the ones we want? If not, who are the ones we want and how do we get them?
Who are our most influential investors and what are their most pressing issues? If so, what are they demanding from these companies? What do you suggest that the board and the company modify before others ask us to do it? Cultivating the right investors: In a world where every company has to work hard to raise investor capital, the new IRO must master how these competitive forces work and take the offensive, foretelling the decision-making trends among the buy-side analysts.
The best IROs will know how to find the right investors for the company and proactively cultivate them and try to get them on board. Because CEOs today need to spend an increasing amount of their time with their external stakeholders, a good IRO can take some of the pressure off of a CEO by finding and cultivating the right investors.
This expanded the need for public companies to have internal departments dedicated to investor relations, reporting compliance, and the accurate dissemination of financial information.
IR teams are typically tasked with coordinating shareholder meetings and press conferences, releasing financial data, leading financial analyst briefings, publishing reports to the Securities and Exchange Commission SEC , and handling the public side of any financial crisis.
Unlike other parts of public relations PR -driven departments, IR departments are required to be tightly integrated with a company's accounting department, legal department, and executive management team, such as the chief executive officer CEO , chief operating officer COO , and chief financial officer CFO. In addition, IR departments have to be aware of changing regulatory requirements and advise the company on what can and cannot be done from a PR perspective.
For example, IR departments have to lead companies in quiet periods , where it is illegal to discuss certain aspects of a company and its performance. These opinions influence the overall investment community, and it is the IR department's job to manage analysts' expectations. S Congress. Investing Essentials. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.
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