Investor Relations

50INVESTOR RELATIONSownership, and sell-side coverage? What kind of program reportingdoes the agency provide to clients?How many executive staff are dedicated full time to investor relationsin the agency? How many accounts does the team handle? How muchaccess will the company have to the agency’s senior staff? What is theaverage number of years of experience of each team member?How can the agency demonstrate it has the established reputation andrelationships that the company needs to achieve more visibility in theinvestment community?What is the agency’s fee structure?Request a sample of work completed by the agency that is relevant to yourcompany’s needs. You may also want to test—free of cost—the capabilitiesof the advisors by asking them to formally present their recommendationsto solve a given issue the company is currently facing. (“What arethe top five actions that we need to undertake to increase retail ownershipof our stock?” “How should we improve our presentations to attract moreEuropean investors?”) This will provide you not only with free advice, butmore importantly, with direct insight into the firm’s real competence.A successful Investor Relations relationship is built upon a partnershipbetween management and the advisory team, beyond simply financial considerations.This is particularly essential if you want the Investor Relationsfirm to help you build the bridge between management and the financialcommunity.The next step in the selection process is, therefore, to make sure that theproposed account team will attend the interviews and that management willparticipate as well. It is critical that they feel comfortable with the team andthat honesty and attention will prevail on both sides of the relationship. Forthis relationship to work best, it is important that you feel the firm can beyour ally in the market, not your enemy. For instance, if you hire an outsidespokesperson, you will make sure that he or she is competent and does nothandle too many accounts at the same time. Indeed, no matter how largeor well known the consultancy, the quality of advice will depend on theindividual consultant.At the end of this selection process, the written proposals you will receiveshould contain a detailed fee structure, but also references for you to contactand get feedback on your specific account team rather than on the agencyat large. Also, ensure that the candidates apply a strict conflict of interestpolicy and that they have never been prosecuted in the past for using insideinformation.