Career development in the mid-cap space

Finding the right IRO can be more difficult for companies outside the FTSE 100 than within. Ross Hawley describes his experience and offers tips. Feature article from IR Society – Informed – Winter 2014/15

Af: Ross Hawley

Since 2009 I have spent time setting up the IR function for an AIM-listed technology company; undertaking an IPO on NASDAQ and then after 15 months a trade sale; and most recently setting up the IR function for PageGroup, the leading specialist professional recruiter. Does this constitute a ‘career’ in mid-cap IR? – definitely not, but it does give a perspective on IR away from the larger FTSE 100 teams and in the heartland of the profession which the IR Society and its education committee would like to better service.

The right background
What is clear is that unlike the investment banking world where degrees in finance and MBAs increasingly dominate, there are still a diverse range of backgrounds and routes into the IR profession. However the regular desire for a CA or CFA finance qualification underlines the fact the role is much closer to the finance function than corporate communications. Equity analyst and corporate broker are traditional City routes, but the in-house appointments from business development, finance, treasury and technical teams are equally valid, especially for specialist businesses.

Kyra Cordrey, head of the IR practice at PageGroup talks about the background of IROs: “What CFOs are really looking for is knowledge, be it sector or technical knowledge. They also need and want their IROs to come across as credible and have confidence when speaking and being challenged by analysts! This is particularly true in the smaller company arena where the IR team is going to be only one to two people and often with an executive team with limited PLC experience. They are therefore looking for an IRO with market experience to balance this. If they cannot find a perfect fit, relevant industry knowledge plus IR exposure rise in importance.”

Sometimes this can feel a Catch-22 situation for someone looking to join the IR profession, in that almost all job specs state a requirement for ‘x years IR experience’. But if you don’t have direct experience, try at least to get some form of exposure: help
out at results time; volunteer to proof-read annual reports; help at the AGM; ask to sit in on investor conference calls; get on the
analyst report circulation list; or lay out the room for the IR day and manage the Q&A microphone. I did all of these in my time as
an in-house corporate financier, and it was key to getting an IR role, as I could demonstrate direct exposure and sufficient relevant experience, even though a formal IR role was not on my CV.

Ongoing career development
Exposure and understanding can also be gained through participating in the IR Society activities, whether events, introductory courses, or undertaking the Certificate in Investor Relations (CIR). There are also a greater number of courses designed to assist in ongoing professional development, to give an IRO the best practice tools to do the job. The newly introduced Deliver course gives the more experienced IRO a structured programme covering key aspects of the role and invaluable executive insights, plus a broad alumni network.

Having always been a sole-practitioner IRO, I know how lonely the role can sometimes be; in the sense that there are questions and immediate issues which come up where your immediate colleagues in the finance team won’t be able to support, and the brokers don’t have the inhouse understanding. This is especially true if working out of London and often far away from senior management, or at a NASDAQ listed company where you are 3,000 miles away from analysts, advisers and the majority of investors.

The IR environment
The changing regulation around corporate access has been highlighted as potentially having the most profound impact on the smaller company. This will be especially so if it reduces the appetite to maintain research coverage and support for the lesser
known corporates, smaller companies or out of favour sectors.

Getting your voice heard, and ensuring adequate take-up for international roadshows could well become much more of a challenge for smaller companies, and risks irate CEOs with half-filled schedules.

Direct access may not be the complete answer for this issue, nor the impending emergence of independent roadshow providers, as ongoing research coverage and investor dialogue remains key for a stable shareholder base.
Digital media is also adding a new dimension, but not necessarily all positive, as the time commitment to properly write a blog or undertake a thought leadership programme is significant. But what I believe is true for all companies is that ‘content’ remains key: it has to be worthwhile and relevant in order to publish, irrespective of whether the format is 140 characters, a weekly blog or otherwise.

Anna Hartropp, a former in-house IRO who now advises small- and mid-cap companies on their IR strategy at Liberum
Capital comments: “For those small- and mid-cap companies who have no dedicated in-house IR resource, it means companies
are going to have to be more critical of how and where they spend their time. The effects of the change in regulation won’t
happen overnight, nevertheless getting the right advice and having trust in a good corporate access programme will become
ever more essential. Small- and mid-cap companies need to ensure they still receive the same quality roadshows that their largecap counterparts are offered.

The effectiveness of these roadshows will be determined by the accuracy of feedback and will highlight the level of education given to investors prior to meetings – this should ensure that the time
given up by IR or management is valueadding to the ongoing IR and communications programme being run by a company.”

For those considering a role in the FTSE250 and AIM marketplace, there are important distinctions when compared to many of the larger FTSE100 teams. There is often a different feel to the environment, greater access to the C-suite, and certainly much less specialism and more of a hands-on culture. The IRO is expected to be more of a jack of all trades, manage conferences
and IR meetings alone, and often also be involved in financial PR and CSR, which will suit some people much more than others.

At the same time, the key requirements and role of an IRO are consistent, no matter what the size of company, stock market
listing or location. The IRO needs to be able to tell the corporate story both in written and verbal forms; to be a trusted channel
for the analyst and investor community; and to manage the IR calendar. The size of the IR team will determine their capacity to
do all of this, and to what degree of perfection! Being clearer about the core priorities, knowing how much one can ask for assistance from advisers, and being selective in the travel programme all become more important when resources
are limited.

From the IR Society perspective, the education programme is looking to offer more of the toolkit to help support IROs at whatever stage of their career or size of team, and importantly to also give opportunities to build that professional support network. Knowing how others decide their priorities, decide on which conferences to attend, or frequency of updating their  defence manual, can be extremely valuable in sense-checking one’s own plans.

Finally, an education programme only really works well with the support and participation of the membership. We can therefore take great heart from the fact that in the most recent membership survey, around 15% of IR society members indicated they would even be interested in presenting on one of the courses. The challenge now is to make that happen.