How To Handle Investor Expectations During An Exit

Unexpected news, whether good or bad, can have an impact on investor expectations, shareholder participation, and stock price.At this year's CIRI Annual Conference, Irwin co-founder and COO Mark Fasken conducted a discussion with IROs about how they have either exceeded or fallen short of investor expectations due to a range of factors, including management changes or updated guidance.The panel talked about how they planned to keep the Street informed of the shift, deal with the impact, and remain on course.

Get to know the panel.

• Agnico Eagle Mines Limited's Vice President of Investor Relations, Brian Christie
• Karen Keyes, Canadian Tire Corporation's Head of Investor Relations
• Calvin Locke, Keyera's Manager of Investor Relations
• You must first understand investor expectations in order to manage them. The panel discusses strategies for monitoring investor sentiment.

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How can one comprehend the sentiment of investors

The quantitative and qualitative techniques Karen use to gauge investor sentiment are described.

Canadian Tire produces consensus EPS projections for the current and next quarters from a quantitative standpoint. In order to understand how individuals are creating their models and to track movements using a quantitative perspective, they also conduct a consensus-gathering exercise by the sell side.

In order to better grasp what they're hearing and what has changed, they frequently try to communicate with their analysts and investors outside of the regular meeting cycles.

The following are some efficient ways to learn what your investors are thinking about your company:

• reviewing investor newsletters.
• Develop become a peer analyst.
• keeping an eye on industry M&A.
• Examine the newspaper.

Brian discusses how he tracks investor sentiment utilizing a market surveillance organization that monitors shareholder movements, while restating Karen's recommendation to become involved and communicate with shareholders through meetings and other channels.

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Keeping up with developments and the importance of perception studies

Keeping organized and being able to remember key themes and patterns from your investor encounters are necessary for comprehending investor mood. It's critical to understand what the street is saying and what your company needs to accomplish.

Karen described how, in addition to conducting perception surveys, she maintains note of significant topics that have come up during the quarter's shareholder meetings in order to better understand their shareholder base and answer frequently asked concerns during their investor day.

Perception studies may be highly helpful exercises for organizations. Calvin talks about some of the findings from their perception study conducted over the past two years. Prior to and during our March investor day, we carried out a perception study. Because of its high efficacy, we were able to improve the messaging we used at Investor Day.

They are doing this perception poll in advance because they want their investor day to be a success. Even though they were already deeply engaged with their shareholder base and knew what investors anticipated, they still wanted to dig further to uncover any underlying issues. Calvin and his colleagues determined that their shareholders wanted them to address five key concerns after the perception study. They received a tonne of praise after their presentation of those topics on the investor day.

When they did a perception evaluation after the investor day, they found that, generally speaking, their shareholders were pleased with the topics discussed and impressed by the caliber of the event.

How should management changes be handled and communicated

Changes in management may be challenging, particularly when they are sudden and unexpected. According to Karen, investor days are an excellent way to present your shareholders with the larger team. Should a member of your team ever assume an executive position, the market is already somewhat acquainted with them.

Additionally, Brian thinks it boils down to building strong bonds with the different banks and sales teams. "To spread the word, meet with their teams and speak with investors." It is important to be proactive.

Keyera saw a CEO transition last year. Calvin explained how they had effective succession planning and prompt involvement to ensure that their shareholders had an opportunity to meet and build relationships, which made the move very simple. 

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How may investor expectations about M&A be managed

Brian talks about his company's recent public merger with Kirkland Lake. Since there was already a 70% ownership overlap between the two businesses, the merger was largely positively regarded. With the exception of one significant shareholder who voted against the merger and later chose to sell their shares, most stockholders felt secure heading into the merger. The shareholders of Brains were quite happy.

But not every merger goes as well. When you announce a merger, your share price often reacts quite quickly.

Karen explains that in order for shareholders to grasp the company's future and not be taken aback by the merger, it is crucial to properly position your messaging, concentrate on value generation, and have continuous interactions.

CGI purchased Logica, Karen's former employer. Despite operating in separate regions, the businesses were strikingly similar. As a result, the two did not have many of the same analysts or banks. Different focus was needed for the merger since it was important to tell shareholders about the history of both businesses. Most analysts will stop covering because of the lack of knowledge, and the analysts themselves become disinterested very fast.

"If you have a seat at the table during the internal M&A discussions, you have the chance to ensure that you're providing the bankers and the FP & A teams working on the deal with a reality check to ensure that the multiple being put in the forecast matches what you've heard on the street and to steer it if you think there's a disconnect."