The road show is a repetitive series of meetings where a team of company presenters give essentially the same presentation multiple times over several days, and frequently in multiple cities. The road show is a versatile event tool, because its subject can be altered to match the audience. For example, it can be an informational meeting with current shareholders living in a specific area, or a sales pitch to a group of local brokers, or one-on-one meetings with institutional investors or large stockholders. Each of these audiences requires a different presentation based on their specific needs, so the management team will impart a different set of information to each one.
Given the repetitive nature of the presentation and the heavy travel schedule involved in a road show, there are several best practices to be aware of that can lighten the overall level of participant stress. They are:
- Preparation. The presentation should be thoroughly prepared in advance. By doing so, the speakers can relax between meetings and spend more time mingling with attendees. This usually calls for a practice session prior to each road trip, to ensure that the presenters are thoroughly familiar with their materials.
- Duplication. Given the intense travel schedule of a road show, there is a high probability that something will be lost or fail at some point. To mitigate this risk, keep a separate set of backup speaker notes and copies of the presentation. Also, bring chargers for cell phones and laptop computers, and consider bringing spare batteries and projector bulbs, too.
- Buffer time. Always leave enough time between meetings for travel between locations and on-site setup time. If this means that there will be room for fewer meetings during the day, then fine – schedule a longer road trip.
- Shipping. The presentation package for each attendee may add up to a considerable amount of shipping weight. If so, pre-ship the presentation materials in advance to each meeting location. If this is not workable, then store the materials within the group’s carry-on luggage, which minimizes the risk of it being lost in transit.
- Audio/visual equipment. Only bring presentation equipment if it is not available at the various meeting locations. Bringing a laptop computer and projector is not only a hassle, but there is a risk of breakage. Thus, always call in advance to verify what equipment will be on hand.
- On-site branding. Assign a subordinate the task of branding the company name at each location. This can involve using the company logo on attendee name tags, presentation materials, and signage. This person does not have to go on the trip, but must have overall control over the design of the materials brought on the trip.
- Trip logistics. The speakers need plenty of time to decompress between meetings, so have someone else handle all luggage for the group, as well as travel connections. If possible, hire a van and driver during the group’s entire stay in each city.
During a road show presentation, the CEO is the primary speaker and is responsible for telling attendees about the investment opportunity presented by the company. The CFO presents the financial aspects of the business, and may repeat any guidance that has already been issued elsewhere. The investor relations officer (IRO) is responsible for the logistics of each road show, and may bracket presentations with introductory and concluding comments.
The CEO, CFO, and IRO may not feel comfortable presenting to a large number of people. If so, a PowerPoint presentation projected onto a screen shifts the audience’s attention away from the speakers and to the screen, which may alleviate some speaker nervousness. However, if a presenter is comfortable with the audience and especially if he can speak “off the cuff” from limited notes, then by all means eliminate the projection equipment and let the audience focus directly on the speaker. A team of skilled speakers is a powerful tool, and the IRO should work hard to polish the management team’s speaking skills to reach this level of expertise.
If a road show presentation is to brokers, the presentation is simplified, and uses a considerable amount of repetition. Brokers want to know how they can make money from the stock, so present the investment message at the beginning of the presentation, reinforce it several times as the talk progresses, and finish with a reiteration of the same message.
If, during a road show, there is a meeting with a small number of participants (as would be the case with an institutional investor), consider keeping a recording of the conversation, to prove that no material, undisclosed information was imparted. Also, institutional investors expect more information than brokers, so send them a fact sheet in advance of the meeting, and provide a duplicate at the beginning of the meeting. This does not necessarily mean that they also receive a complete copy of the full presentation at the beginning of the meeting, since they may read ahead and therefore pay less attention to the speaker.
If there is an attendance sheet for a presentation, then the IRO should use it to send to each attendee a thank-you note, an invitation to make further inquiries or attend a plant tour, and a request to put them on the investor relations mailing list. Also, offer to send investor materials, such as a fact sheet, to their associates. Finally, include an evaluation sheet, in case anyone has suggestions for improving the presentation. The response rate on these materials will be low, but it is still worth making the effort in order to add a few people to the investor relations mailing list.
A crucial issue with road shows is their timing. If a company has just released quarterly results, this is an ideal time for a road show, because there is minimal risk that anyone will inadvertently state any material, undisclosed information. On the other hand, if a road show is scheduled for the period just prior to the release of quarterly information, company participants will very likely know the quarterly results, and may let slip some hint about those results. Given the resulting disclosure problems, it is best to completely avoid any road shows during the weeks when quarterly results have been compiled but are not yet released.
Of all the various types of investor relations events, the road show presents the greatest risk of over-communication. The problem is that the IRO may fall into the habit of visiting the same people on a repetitive basis, which is roughly comparable to “preaching to the choir.” Realistically, there is no justification for meeting with the same people even once a year, since they already know the company’s story, and do not need to hear it again. If the IRO persists in meeting with the same people too frequently, then everyone who has heard about the company will have already bought its stock, resulting in no new demand. Instead, shift the road show to new cities on a regular basis, or at least use different sell side contacts to arrange meetings with new people who have not heard of the company before.
A final note about road shows – how effective are they? The CEO, CFO, and IRO may be spending a considerable proportion of their time on the road, meeting with the investment community. This is a large investment in executive time, so there must be a discernible tradeoff between the labor and out-of-pocket cost of road shows and the number of shares placed that are directly related to them. A reasonable goal over the long term is to stay below a road show cost of $0.05 per share placed. If the cost increases beyond this benchmark, then the IRO should work on targeting a smaller group of road show attendees whose investment interests are more closely aligned with those of the company.