Equity story put to the test
Summary
Growing a company’s shareholder value is a long-term endeavour. The process begins in the early stages of the company’s growth trajectory and continues throughout its entire journey. Investors are generally interested in companies operating in growing markets, with a clear strategy and action plan for achieving their goals, a proven track record of profitability, and a history of consistent and transparent communication throughout their journey.
The equity story plays a key role in investor communications by telling owners and investors where the company is headed and why it is a good long-term investment. It describes the company’s industry, vision, and goals; why the company exists; and also communicates the company’s values and way of operating. Furthermore, it engages and inspires investors, customers, partners, and employees alike.
Building an equity story and investor communications as a whole is also about long-term, strategic reputation building and open communication with key target groups: analysts, investors, shareholders, and financial journalists. Its value can be accurately measured by the stock price and how investors value the company.
The equity story is not a separate component of the company’s overall communications; rather, the common thread and key messages woven into it are reflected in all of the company’s communications and interactions. For the company itself, the equity story serves as a guiding principle and an extension of its strategy. It is a means of building the company’s market value and trusting relationships with investors and other stakeholders. It is important to remember that investor communications—even though it is a distinct field with its own rules—should not be separated from the company’s other communications. Companies are viewed as a whole, not just through the lens of investor communications, and both good and bad reputations spread widely across modern media channels, especially on social media.
A high-quality, long-term investor narrative can be crucial to a company’s future growth plans. It is therefore advisable to begin building the investor narrative while the company is still in the early stages of growth. As the company grows and evolves, so too does the investor narrative. When the equity story has been built during the company’s growth phase, communicating it and building investor confidence become easier when a potential IPO is on the horizon.
A well-crafted equity story and a company are put to the test in uncertain times. A consistent, transparent, and confidence-inspiring equity story can withstand setbacks. The more compelling and credible the equity story is, the more likely the company is to attract new investors and maintain the long-term confidence of existing investors.
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