Investor relations 101: How CFOs like Kenneth Goldman, Gennady Barsky deal with shareholders and analysts

5 February, 2018

Juggling multiple roles, and managing professional relationship with shareholders, analysts, bankers and ratings agencies, are enough to make anyone buckle under pressure, including seasoned CFOs. For people who have just climbed the corporate ladder and assumed the new role of a CFO, these demands can be intimidating, if not terrifying. However, there still are lessons that we can learn from the work of CFOs like Kenneth Goldman, Hans Vestberg and Gennady Barsky.

We share with you five pro tips on how to handle investor relations being a CFO, that might come handy, especially if you have just held the reigns. Take a look:

Allocate your time effectively between buy-side and sell-side investors

As a CFO, you have to deal with sell-side analysts as well as buy-side analysts. While it is important to pay heed to both, who should claim more of your attention? Veteran CFOs suggest that it all depends upon the timing. If your current focus remains upon the existing and prospective stockholders, investing your time with the buy-side analysts would be more prudent.

Share your milestones with your investors

As a CFO, make sure that you use the same messages about the company’s earnings, margins, and cash flow with the stakeholders, whether it is your board, the investors, or the employee base. Stakeholders have vested interests in the company’s progress. They want to know what milestones you plan to measure, and how you plan to achieve the aforesaid goals. Therefore, being a CFO, you should be able to talk about milestones during strategic initiatives.

“In case there is an incremental change to your model, a CFO must be able to cite the milestones affected by that change,” suggested Gennady Barsky, ex-CFO of JetSmarter.

Demonstrate the depth of your team

Investors and customers have a lot in common. Since they are the ones buying your stock, you need to appoint an IR Director who can earn the investors’ trust and increase their engagement with the company. According to Eric Pillmore, Senior Advisor to Deloitte’s Center for Corporate Governance and former CFO, General Instrument Corporation, the IR Director chosen by the CFO should be able to grasp the numbers, work cross-functionally and communicate in a way that fosters trust. Also, business unit leaders should be trained accordingly.

“Showcasing such bench strength widens your touch with the investor base and demonstrates that you have the depth of management shareholders want,” he said during an interview.

Develop a playbook

If you have just assumed the role of a CFO, you might find it a bit overwhelming. Believe it or not, you will be asked a multitude of questions during your interactions with the investors, and there will be questions for which you might not have a spontaneous answer. The safest bet here would be to create a playbook. Gennady Barsky, during an interview, pointed out that about 80% questions asked by investors during various interactions are common. If you have a sound understanding of the company’s business model, these 80% question would be the ones you can easily answer. The remaining 20% questions are the only ones that require some serious preparation, which is quite an achievable target.

Put sincere efforts towards gaining cross-functional knowledge

Being a CFO is not just about sitting in your office and managing financial functions as you sip on the coffee. To be able to manage investor relationships like a pro, you need to be aware of the full picture of the business. A better understanding about the issues focused upon by your strategic business unit leaders, can prepare you better to address the concerns of your investors. As you gather more knowledge and develop new ways to promote the business model of the company, you’ll find yourself forging better relationships with the investors as a CFO.

As a bottom line, it would be wiser to think like an investor before you finally approach them as the CFO of your company. While you might want the investors to view your company in a positive light, gaining such a reputation doesn’t happen overnight. Being the company’s face, you need to know the business and its drivers, along with the questions investors might want you to answer. Do your homework, be prepared for a lot of questions, but never forget to think like an investor. With all that checked, you good to ace investor relationships as a CFO!