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A Practical Approach to Investor Targeting: Advice from Scott Einberger of JLL
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With volatile market conditions resulting in constrained access to capital, having a diverse shareholder base is more important than ever.
So how can IR teams attract new investors and be more effective in their outreach efforts?
Scott Einberger—IRO at JLL—recently shared his best advice and tips on building, prioritizing, and measuring investor targeting efforts on Winning IR. Continue reading to better understand what he believes IROs need to know when it comes to effective investor outreach and relationship building.
Building a well-thought-out targeting strategy allows IR teams to connect with potential investors who are most likely to be interested in their organization and prioritize them based on fit and potential business impact. Through a strategic list-building process, IR teams can improve their chances of securing investment from partners who can contribute to a company's growth and success.
The first step is to pull insights from various data sources to assemble a comprehensive investor list. Examples of these sources include:
Banking partners have an extensive network of investors to which they can provide referrals. They can also help structure and present investment opportunities in a way that resonates with potential investors. Maintaining a solid relationship with banking partners makes them more likely to support an organization’s targeting efforts.
Sell-side analysts conduct in-depth market intelligence that IROs can tap into to tailor their targeting strategies effectively. Sell-side firms interact regularly, have direct access to institutional investors, and can provide insight into their investment strategies, preferences, and holdings. The sell-side also often acts as an intermediary between companies and investors, and IROs can leverage their relationships and established networks to connect with targeted investors.
IR teams looking for further information on potential investors should review pre-existing third-party lists or databases that external organizations compile. These lists are created and maintained by separate companies and can be valuable resources in an investor targeting strategy. However, when using third-party lists, it’s important to supplement the data with proprietary research to ensure accuracy and optimal results.
Looking at peer ownership, or analyzing the ownership patterns of industry peers, can provide valuable insights and benefits for investor targeting. By doing so, IR teams can tap into the investor preferences within their industry and identify relevant investors.
Investor relations management software such as Irwin allows IR teams to find right-fit investors for their company based on relevance, investment style, sector, current holdings, and more.
“Irwin has a great tool for targeting, which I use to pull best-fit firms from a generated list.”
Scott Einberger, IRO, JLL
Scott advises IR teams to avoid filtering or sorting this initial list. “It’s meant to be a starting point that you can refine later,” he explains.
Once IR teams have built an extensive targeting list, the next step is to refine the data to highlight best-fit investors who align with an organization’s goals. Refining the investor targeting list will require additional research and analysis and ongoing data evaluation.
Consider these steps to create a more focused investor targeting list:
IR teams should begin by having clear and specific criteria in mind when looking for potential investors. These factors include industry expertise, geographical location, investment style, alignment with an organization’s vision, and more.
Organizations must evaluate their current investor base and identify the shareholders with a history of being supportive and valuable to the company. This assessment can help IR teams identify characteristics and traits in investors that can be used to refine their targeting criteria.
IRM tools such as Irwin can provide deep insights into investors' preferences, investment history, relevance, investment style, sector, current holdings, and more. “I'll use my IRM tool and begin looking up firms and contacts to get a feel for who's on my list and whether or not they align with our company goals,” Scott explains. “I want to try to get firms who can take a meaningful position in my company. Usually, I aim to start with the larger firms and then work my way down.”
Examining the investor base of peer organizations or competitors is “a good way to get a feel for who's interested in the sector or your industry,” explains Scott. Investors holding positions in similar companies may be more likely to consider investing in your organization as well, and you can leverage this information as you have conversations.
Another solid qualifier IROs should consider when refining their targeting lists is considering which investors they’ve been in contact with lately. “That’s one of the key aspects in knowing whether someone is interested,” Scott says. “Those are the firms I move up to the top of my list.”
By evaluating past ownership, IROs can focus on re-engaging investors who have previously shown an interest in the organization. “These shareholders were interested in the organization at one point, but something happened where they disengaged,” Scott states. “This is your opportunity to win them back.”
After factoring all this data in, aim to build a rank order list. “Put firms into large buckets including a top list, a middle list, and a bottom list,” explains Scott. “From there, you can refine it even further.” Scott’s ultimate goal is to end with a “top 10” investor list, but this final metric might differ for each IRO.
Remember: investor targeting is an ongoing process. IR teams must regularly review and update their investor targeting list based on company strategy changes, economic factors, and investor preferences.
While some IR teams may find value in turning to external sources such as brokers or other third parties for their investor targeting needs, there are many benefits to keeping the process in-house.
“Over the years I’ve found that I can get equal or better value by doing it myself rather than using a third party.”
Scott Einberger, IRO, JLL
In Scott’s experience, he’s built an intricate database of firms and contacts that he uses in his targeting efforts. “I build relationships and leverage them in the future,” he explains.
Other benefits of keeping investor targeting efforts in-house include:
Most IROs familiar with investor targeting know that successful outreach requires patience, persistence, and the ability to adapt your strategy. Building relationships with your target audience and achieving desired outcomes will take time.
So, how should IR professionals successfully conduct outreach with the investors on their targeting list? Scott employs a few tactics:
“I’ll reach out to the firms on my target list when we announce earnings and ask them if they’d like to have a call to touch base and potentially discuss the quarterly results. It’s a good way to simply get the ball rolling and peak their interest.”
“If we’re hosting a non-deal roadshow (NDR) in a specific location, I'll reach out to firms on my target list for that city and conduct outreach geographically You do have to be patient with the process because not everyone will respond immediately and it takes effort to try to follow up and ensure you're staying on top of it.”
“I always try to find the analyst who covers my industry or sector, because I really want them to build the model and do all of the background research that the portfolio managers will use when making an investment decision. If I can have a positive relationship with the accompanying analyst, I'm already halfway there to winning a target.”
“Many larger firms will have corporate access groups who can provide access to a network of investors and facilitate meaningful conversations. IR teams should reach out and ask who covers their industry to grow their connections within the space.”
“I've successfully reached out to several targets that have requested meetings while attending conferences. Although sometimes I’ve arrived at the conference, and the meeting list is shorter or has changed, the initial interest in a meeting is still there. And so I’ll reach out to those contacts individually.”
“Asking current shareholders if they speak to somebody at a specific firm, or if they have a contact there that they know is incredibly valuable. If they're a shareholder of your company, they have a vested interest and want the share price to do well just as much as IR teams want the share price to perform well. And so, most often they’re willing to share some of that information and make introductions.”
IR teams should experiment with various outreach tactics to see what works for their target list. “I try to reach out at least three times to a firm before I reorder my targeting list,” explains Scott. “I don’t recommend removing anyone from a targeting list because you never know when circumstances change.”
For Scott, the classic form of an email seems to return the most success in his investor targeting outreach efforts. “People appreciate the opportunity to respond on their own time,” he states. “I keep the initial outreach fairly short and simply introduce myself, my organization, and why I think we’re a good opportunity.”
IR teams must remember to customize their outreach depending on the recipient. “If I know they're familiar with the industry, I might give a little bit less background and focus more on just the firm itself or my company,” explains Scott. “If there's somebody who I know isn't heavily invested in my industry, I’ll provide a brief background—but this should be no more than four to five sentences.”
Success in investor targeting will likely look different for every IR team, depending on their organization’s strategy and overall goals.
Here’s how Scott thinks about success:
“Ultimately, IROs should aim to refine their original target list to a final top ten. While this list can evolve throughout the year as IR teams discover who is and isn’t interested, there should continuously be a list of the top firms they’re trying to attract.”
Out of the top ten firms, Scott aims to convert at least two into shareholders throughout the fiscal year. “I want them to have enough capacity and assets under management to take a meaningful position in my company over time,” he explains. “From there, I can build and cultivate that relationship as we go along, and hopefully, they build their position size over time.”
With that being said, IROs must be flexible on whether or not an investment firm fits their criteria. “I use fit as a way to rank and order my targeting list, but I don't want to get overly caught up in those details because the outcome isn’t always what you expect,” explains Scott.
“Sometimes you may think a contact is a bad fit, and they turn out to be interested. Other times, the opposite happens where you believe they should be a great fit and you have to pivot because the firm isn’t interested, or perhaps they don't have an analyst covering your industry at the moment. There are so many unexpected factors that I aim to first reach out to firms, see who shows interest, and build relationships as I get those responses.”
When creating goals and success markers in investor targeting, IR professionals need to keep in mind that it can take months—or even years—to convert a target investor. It takes multiple conversations with different stakeholders to reach a successful outcome. Before investors even consider taking a meaningful position, IR teams will need to have upfront meetings with the accompanying analyst, discuss the stock with the portfolio manager, and introduce their targets to executive leadership.
Scott believes that six to nine months is a reasonable time frame. “They're going to want to conduct their own research depending on how familiar they are with the industry and your particular story.”
Listen to Scott’s full Winning IR episode for more practical advice on how to identify and attract new investors.
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