With regular investor reporting largely confined to spreadsheets, templates and a smattering of side-letters, harnessing the power of AGMs as a means of better engagement, is becoming an essential investor relations tool.
Private equity’s steady shuffle into the mainstream has meant the days of investor meetings at the golf course or yacht decks are long gone. Todays’ typical funds comprise a wide array of investors, often hailing from some of the world’s largest institutions, meaning AGMs are increasingly corporate, and perhaps stilted affairs.
However, private equity is still an alternative investment class, and rather than slipping into the grey mist of corporate presentations, the industry can retain its edge through its own unique spin on AGMs.
Time to shine
Unlike its listed counterparts, private equity managers are not tasked with overly regular or daily reporting. While the direction of travel is certainly towards greater transparency and granularity when it comes to financial reporting, for the real life reporting – the story behind the numbers, the opportunity to remind investors why they have allocated tens or hundreds of millions to a team – the AGM is the time to shine.
And it is against this backdrop that private equity firms are finding innovative ways in which to wow their investors; to prove to them they made the right decision in backing the team, and to ensure their continued support.
MJ Hudson recently advised on seven ways in which managers can improve AGMs, including rehearsing speeches and presentations, decorating the venue, involving more team members and ensuring quick follow ups. The article also suggests interspersing presentations with videos and panel discussions.
When it comes to using rich media in AGMs, private equity firms have a few hurdles to jump. A key driver for creating and showing videos at the AGM is to create a feeling of uniqueness. Says private equity communications expert Kimberly Romaine: “They can work really well to differentiate AGMs. If you’re an investor with a diverse portfolio, you’re probably attending lots of AGMs. The important thing is to engage as well as inform – finding an appealing way to disseminate the information.”
Indeed, an equally important motivation for using videos is to engage investors with portfolio companies. Particularly for new investments; snappy interviews with excited founders and management teams are infectious and captivating.
A lively and well-edited film, which neatly highlights the business, its history, its customers, growth potential, and most of all – highly talented, lovely and capable management team – neatly communicates the advantages of the investment. Furthermore, having a library of these videos on file can and should be used for other purposes including marketing and fundraising.
The benefits of featuring videos of portfolio companies at AGMs are clear. However, there are challenges to be thought about.
First, of course, is cost. It is unlikely these kinds of materials can be produced in-house, which means a third-party provider needs to be engaged. That exercise itself comes with its own set of challenges – sourcing, interviewing, comparing, referencing and so on.
Next is thinking about how it will work on the day itself. With AGMs typically taking place at a hotel or special offsite venue, ensuring all of the AV needs are met adds more complexity to an already logistically challenging day. Integrating new forms of media on top of typical powerpoint presentations and speeches requires AV expertise.
Perhaps the most important consideration is how to create an engaging and informative video. After going to all the hassle of carving out diary time with portfolio companies, securing reliable and credible providers and ensuring the venue can cater to your escalating AV needs, it would be tragic if the content fell flat. Says Romaine: “If it works it really wakes people up and it’s exciting. But it’s got to be relevant, it’s got to be engaging.”
Romaine also points out the need for careful balance when it comes to integrating rich media at AGMs. There’s a danger of going too far; a continuous stream of videos, infographics, blaring soundtracks and so on could be overwhelming. “It’s good to sprinkle these sorts of things throughout the day and not to overkill.”
While its clear that making the most of AGMs is important for a firm’s overall investor relations efforts, when it comes to adoption of rich media and new-fangled tech, finding appropriate balance is essential. Today’s investors expect well-produced and thoughtful AGM presentations, but the key is in the content; ensuring the most important and valuable information is being communicated in the easiest and most digestible forms.