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Can
accurate industry
analysts' conclusions
put more investment
dollars in
your pocket?
You may be familiar with
the drill: pitch your
business model to the
industry analyst(s) at
Gartner, Forrester,
Jupiter/Media Metrix and
IDC and hope they note
your company in a study.
At least you are hopeful
that the industry
analysts' conclusions
will demonstrate a
sizable market for your
products. In either
case, you are betting
that the industry
analysts' conclusions
will woo more investors.
Is that all you should
expect from your
efforts?
The answer is no.
You should also expect
that the industry
analysts' conclusions
might lead to a more
accurate valuation of
your business.
The sadly missed
periodical, The Industry
Standard, estimated that
in 1999 the difference
between the offering
price of Web ipos and
their first day opening
price averaged a
whopping 78 percent.
That means that ipos on
average were under
priced at the time of
the offering relative to
the market's ultimate
valuation. The end
result: INVESTMENT
MONEY WAS LEFT ON THE
TABLE.
How can you prevent this
from happening to your
company? Make
every effort to assure
that investors receive
the most accurate
picture of your company.
Investors have lots of
options for investment.
To make investors' decision-making
process easier is music
to their ears. A
good solution is to
assure the investors
valuing your company
receive as much unbiased
information as possible.
Industry analysts have
their reputations on the
line when writing about
industry dynamics
and individual
companies. Their
opinions do not need to
conform to any larger
goal. Most
investment analysis on
emerging growth
companies is either
written by the
investment firm managing
a given round of
financing or is
"pay for play"
(where you pay an
"independent"
investment research firm
to write about your
company).
For these reasons,
positive industry
analysts' conclusions
may well hold greater
weight than sell-side
investment analysts'
opinions in the minds of
the early-stage
investor. As a
result, supportive
industry analysts'
conclusions can both
guide investors to your
company and add to the
investors' ability to
accurately value your
company.
What are the
implications of this?
Make certain your
investor relations,
marketing communications
and industry analyst
relations programs are
simpatico: the
messages are
complementary and the
release of information
is synchronized;
●
Allocate time early in
the business development
process to educate
industry analysts about
your company -- don't
skimp here;
●
Facilitate introductions
of industry analysts to
financial journalists,
investment analysts and
investors interested in
your company. My
belief is that the more
accurate the industry
analysts' understanding
of your business, the
more accurate your
investment valuations
may be. With
greater accuracy in
investment valuations,
the more money will be
in your pockets and not
left on the table for
premature investor
returns.
Brian James founded
Simpatico Strategic
Resources in 2000, to
strongly advocate the
integration of marketing
and public relations
efforts. He
consistently combines
his financial marketing
and communications
insights with
complementary
consultant's expertise
in the areas of industry
analyst relations and
marketing communications
to maximize companies'
valuations at each stage
of the investment
process. James has
advised clients in
executive roles both
domestically and
globally for
Burson-Marsteller,
Edelman Public Relations
Worldwide and Padilla
Speer Beardsley. While
he's advised companies
in virtually all
industries, his focus
has been in the areas of
technology,
healthcare,
biotechnology and
financial services.
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