All Hollywood may clamor for tickets to the hottest Oscar soirees, but CFOs yearn for entrée into a different sort of party: the broker conference. “Conferences are an efficient way to talk to investors,” says Mark W. Joslin, CFO of Pool Corp., a Covington, Louisiana-based swimming-pool and irrigation company, who spoke at four conferences in 2007, including the Piper Jaffray Industrial Growth & Business Services Symposium in New York. More important, says Thomas C. Chesterman, CFO of Bionovo Inc., a pharmaceutical company based in Emeryville, California, they offer the opportunity to “get in front of the right investors.”
But getting the most out of the experience requires more than getting invited and just showing up. CFOs and investor-relations professionals agree that conducting due diligence on the audience, developing a distinctive presentation style, and offering targeted information are key to attracting top investors. Your effectiveness at “enticing” those investors during the typical two-to-three- day events, says Chesterman, absolutely influences whether they buy into your future potential.
At the same time, says Erik Knettel, managing director of The Global Consulting Group, companies should never forget that they are guests at these events. “Conferences are a two-way, mutually beneficial relationship,” he says. Companies seek visibility, but it is the conference sponsor — an investment bank, trade association, or paid vendor — that has control over the attendees, the speaking slots, and the one-on-one meetings. To gain any advantage, says Knettel, companies need to view their relationship to the host as one that needs to be managed.
On the Circuit
The easiest way to get in the door, says Knettel, is to have a healthy market cap, extensive analyst coverage, and a successful business model. “If you are a mortgage broker, you are not going to get a lot of invites right now,” he quips.
For smaller companies like Bionovo, an invitation to a conference has to be viewed as a command performance. “We don’t have much choice,” says Chesterman, whose company presented at four conferences last year, including the recent Ninth Annual Acumen BioFin Rodman and Renshaw Healthcare Conference in New York and the Bank of Montreal’s 2007 Focus on Healthcare Conference. Says Maureen Wolff-Reid, president and partner at investor-relations firm Sharon Merrill Associates, “You must do your covering-analysts’ conferences. It hurts your relationships if you don’t.”
That’s true no matter how low the analyst’s rating. “If the institution has a hold [rating] on you, and it is a conference you would normally attend, then go,” says Knettel: it is still an opportunity to present your side of the story and sway potential investors. Paul Gifford, vice president of investor relations at Goodrich Corp., says company executives have presented several times at conferences where the host had a sell rating on the defense contractor.
Paradoxically, companies with more analyst coverage can afford to be choosy. Given that 23 analysts cover Goodrich and most sponsor at least one and sometimes two conferences per year, it is virtually impossible for the CEO and CFO to attend each one. Which take priority, he explains, depends on many factors, including the availability of management, the location of the conference, and whether there are enough potential investors to make it worthwhile. “Luckily, we are popular right now,” says Gifford. “We never have a problem getting to see the people we want to see.”