Insight

The virtuous virtual roadshow

The covid-19 pandemic has disrupted all social gatherings including roadshows and capital markets events. Yet the need for management to maintain clear line of communications with investors has never been stronger as we deal with unprecedented economic uncertainty.

Given its wider reach, lower cost and higher flexibility, virtual roadshow is quickly emerging as a viable alternative for management to interact with investors not only during the emergency shelter-in period but also going forward as part of the post covid-19 investor relations landscape.

Wider outreach

Management tend to visit major investment centers during roadshows to attract the highest investment dollar within limited time. In the U.S., typical roadshow stops unsurprisingly include New York and Boston on the East Coast, Chicago in the Midwest and Los Angeles and San Francisco on the West Coast. Management sometimes have to forgo the opportunity to meet with investors with considerable capital in other cities not just in the U.S. such as Dallas, Seattle and Tampa but also in Canada such as Toronto, Montreal and Vancouver.

With the help of virtual roadshow, management are no longer bound by travel and logistical constraints and are now able to access and interact with investors from around the world. Since no time is lost moving from one meeting to the next, management could have more meetings within the same given time frame and build new relationships with investors in places and regions that they didn’t get to in the past.

Lower cost

A two-person (CEO and CFO), bi-coastal (New York/Boston, Los Angeles/San Francisco), week-long roadshow in the U.S. could cost north of ten thousand dollars taking into account flights, hotel and other logistics expenses. For management who are constantly on the road meeting with investors, the cost adds up at the end of the year and takes up ever larger percentage of the annual IR budget. Virtual roadshow does away with that cost entirely. Instead companies just need to invest a fraction of the travel cost toward monthly subscription of enterprise version video conferencing service.

Just as valuable is saving management time in transit that could otherwise be used toward more productive purposes at the company, with customers, or simply to rest and recharge.

Higher flexibility

The coronavirus pandemic has proven the importance for public companies to have contingency communications planning. Companies that had existing virtual roadshow in place or those that quickly adopt such program are reaping the benefits of being first movers in maintaining “face-to-face” contact with investors during a period of heightened uncertainty.

Virtual roadshow greatly enhances a company’s flexibility to maintain investor communications in the face of unexpected external contingencies whether it’s pandemic, social unrest, or natural disaster. Last year, a tier one global tech company had to switch to virtual roadshow in support of its secondary offering when local social unrest gridlocked the central business district where meetings were supposed to take place. The roadshow must and did go on as long as management had access to high speed Internet and reliable conference platform.

We believe virtual roadshow will complement traditional in-person meetings in the post covid-19 world as management figure out the configuration that best suits their communications needs. Grayling has been helping public and private company management execute roadshows around the world for over three decades. We look forward to the opportunity to collaborate and work on your firm’s first virtual roadshow.

By Shiwei Yin, Account Director, Grayling New York.