For small and micro caps, IR work is becoming more and more comprehensive and complex as a result of new fields of activity. The resources invested in sustainability reporting and in other ESG-relevant areas of responsibility are particularly large. At the same time, both virtual events and social media have become increasingly important in addressing investors. These are the findings of the survey conducted by Dr. Reuter Investor Relations in summer 2023 among IR managers at companies from a wide range of industries in German-speaking countries.
The statements of companies with a market capitalisation of between 20 and 500 million euros were examined. According to all respondents, the increasing requirements for information and mandatory reporting on sustainability issues as a result of the EU taxonomy are absorbing a steadily growing proportion of activities. In comparison to mid-caps and large-caps, which have their own ESG departments, the entire ESG topic area is the responsibility of the Investor Relations department at smaller companies. The website is the most important medium for up-to-date information on all ESG activities.
Another central question was which communication channels and PR work tools are prioritised for addressing the individual investor groups. The most frequently used sources of information were their own website, classic mailing campaigns and social media. For the majority of the companies surveyed, the social media channels YouTube and LinkedIn have become increasingly important for informing private investors, family offices or high-net-worth individuals about products, events and current internal company developments.
Another challenge for the IR work of the small and microcaps surveyed is the difficult investor targeting for more analyst coverage. Due to the reduced human resources on the part of the fund company in recent years, small and micro caps are disappearing even faster from the eyes of potential investors. However, in the wake of the coronavirus pandemic, an alternative to face-to-face meetings has emerged that is being used more and more frequently: Virtual roadshows and investor meetings can be organised in less time as the first point of contact with analysts and investors. In addition, the representatives of individual companies with a market value of more than 200 million euros expressed their willingness to cooperate with external IR experts for capital market communication more than in the past.
In addition to these new findings, the results of this survey confirm the estimates from an initial survey of 28 companies in the summer of 2021. According to this, the “daily business” with its diverse fields of activity absorbs almost all human and financial resources. As a result, IR managers have far too little room for manoeuvre to not only fulfil their duties but also to actively shape their own IR with their own initiatives.
As a rule, one or two people, in some individual cases also three people, are responsible for IR and corporate communications. In general, the smaller the company, the broader the areas of responsibility. Around 60% of the companies surveyed are “one woman” or “one man” shows. In two companies, there was no separate IRO. Here, the IR was carried out by the CFO and the CEO or exclusively by the CEO.
90% of IR employees are also responsible for other issues. For half of all IROs, public relations work also falls within their area of activity. In almost half of the companies surveyed, in addition to internal communication, investor targeting, risk management and branding are also the responsibility of the IR department. PR/representation and marketing are other areas that about 20% of IR managers must additionally take on. In individual cases, the IR is also responsible for treasury/finance and controlling as well as compliance and M&A.
In view of the continuing increase in the areas of responsibility, the question arises as to how small and micro caps can meet all requirements in the future that are increasingly in line with the IR regulations of mid-caps and large corporations. This applies in particular to sustainability issues. In addition, there is investor targeting, the supreme discipline of IR work. This is about generating interest in the financial market with the equity story in order to broaden your own shareholder base. But with all the additional tasks, small companies in particular hardly have the time to attract new investors. Here, external support can be the key to success.