How to Strengthen Your Investor Presentation
September 26, 2014
A company’s investor presentation (IRP), when done correctly, serves as an essential tool to lay the groundwork for a successful investment pitch. The IRP provides a critical avenue to outline key financial indicators and operational and strategic highlights, and understanding buy-side expectations is the first step towards developing a winning product. A survey conducted by Corbin Perception showed that 88% of those interviewed on the buy side indicated that the investor presentation served as an investment catalyst. So you may be asking: What makes for an effective investor presentation?
What to Do
The highest quality institutional investors all look for similar things when evaluating an IRP — and they take note when a presentation is lacking. The key to grabbing investor attention is an explicit long-term strategy, including an outline of the means to achieve it. You have to prove, for example, that you not only have a sound, well-thought-out strategy for driving revenue growth, but that you also have the management in place to translate said strategy into tangible results. Investors are keen to see a clearly documented execution track record, in addition to evidence of pricing power and sustainable growth.
A comprehensive overview of lines of business (LoB) is a must for a home-run IRP, including a detailed growth strategy, margins, competitive positioning and business drivers. A descriptive look at LoBs is less important than a sharp focus on earnings and return on investment drivers, and short-term LoB performance needs to be tied back into the broad strategy for long-term growth. Emphasize competitive advantages, as they are what ultimately differentiate your company from other investment opportunities, and investors place particular weight on operational excellence and agility, high barriers to entry, and world-class, experienced management.
What Not to Do
Just as institutional investors know what they want to see, they also know what will turn them off. A general lack of clarity — including a confused structure or flow — is something you’ll want to avoid. Stay away from excessively long, drawn-out presentations that are vague about growth drivers, and be clear about what you want to achieve while avoiding generalities. Glossing over key negatives while only highlighting the positive is an immediate red flag for the seasoned investor, as is the burying of relevant information or the exclusion of applicable items from operating earnings. Steer clear of focusing too heavily on valuation, and avoid making grandiose claims about expectations that only set the stage for under-performance.
A Winning IRP
The investor presentation, broadly speaking, is your way to engage investors and convince them you are worth their time. Coherent, effective messaging is key, and a strong design — complete with attention-grabbing imagery — will help give your presentation some additional punch. Institutional investors routinely indicate that investor presentations play a key role in shaping investment decisions, so setting aside the resources needed to produce a strong presentation is well worth your while. When made right, your IRP is not only a key resource and critical source of information, but a stimulant for investment.