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Sunday, Jul 21, 2024

Trusted Advisors: Market Uncertainty Creates Opportunity


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“Thanks for understanding – the markets are insane right now,” wrote a reporter, canceling an interview with a CEO at the last minute to cover the latest rout. We understood; it was another day in 2022. Investors in the public and private markets continue to grapple with uncertainty. Inflation is at a 40-year high, moving the Fed to lift interest rates in the biggest hike since 2000. Gas prices are hitting records with California in the lead at $5.82 a gallon, and supply chains are choked with the conflict in Ukraine and lockdowns in Asia.

This comes on the heels of a record-breaking year for the capital markets. In 2021, Southern California businesses raised nearly $14 billion from venture capital – a near 53 percent increase from the year prior, according to Pitchbook data. Enter 2022, and companies may feel like the car is in neutral. Deals are on hold, IPOs are waiting to launch and global venture funding is down.

The path to the next growth milestone may be momentarily paused – whether it be a new funding round, an acquisition, an IPO, or SPAC transaction – but in this moment, leadership teams at growth-stage companies, in particular, have an opportunity. Now is the time to build or evolve a proactive financial communications program that helps maximize valuation in the public and private capital markets.

First, create a compelling investment narrative. Against macro-dynamics and challenges, is your company’s investment narrative keeping up with investor expectations and business realities? A thoughtful approach to building a compelling growth story can include:

Research & Benchmarking:

Ask for candid feedback from priority stakeholders – top investors, analysts, partners, and key leaders at the company – on business strengths and weaknesses. If certain perceptions are a surprise, this can inform strategic messaging.

Narrative Development:

Summarize the growth strategy, explaining how value will be unlocked, and counter misconceptions, usually in 200 words or less. A strong track record of performance, the industry opportunity, how the company can win against its peers, and the strength of the leadership team must all shine through with less emphasis on long-term projections that are likely to change, hurting credibility.

Implement & Communicate:

Bring the narrative to life by updating investor materials, evolving the website, shaping employee communications, adding compelling social media content, and using it to inform interviews.

Second, focus a media strategy on relationships. Over time, a consistent media plan can be a key channel to drive the investment narrative, raising visibility and demonstrating a leadership position. Offering target business reporters, a unique point-ofview or scoop can result in strong, long-term relationships. Today’s news cycle is highly competitive and unpredictable, so the challenge is to think like a newsroom as it relates to storytelling. Tracking trends that drive headlines and connect to upcoming corporate milestones, such as entry into a new market or a major product announcement, can help create media moments.

Lastly, establish a set of public company communications best practices sooner than later. The communications function at any organization will benefit when certain public company standards are implemented. For some, it is helpful to identify a public company peer set and begin monitoring for major announcements and earnings reports. This helps deepen the understanding of Wall Street perceptions and expectations, in addition to the media landscape. Putting a consistent framework in place ensures communications are optimally managed. This includes: 1) training the best spokespeople on the investment narrative and broader corporate story; 2) establishing a disclosure policy for investor and media inquiries to handle them in a timely and appropriate manner; and 3) creating enterprise-wide media and social media policies that are known and followed.

The fact of the matter is the future state of the public and private markets are unclear. During this time of heightened uncertainty, the most prepared companies are thinking critically about financial communications today to be best positioned for whatever may come tomorrow.

Edelman is a global communications firm that partners with businesses and organizations to evolve, promote and protect their brands and reputations. Learn more at Edelman.com.

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