Fighting Back: Getting Tough with Shareholder Activists Through Investment Branding

2 July 2014

By Rob Berick




This is the first post in a new series from guest contributor Robert G. Berick,?Managing?Director at Falls Communication

For centuries, strategists and philosophers have espoused that ?the best defense is a good offense? for the simple reason that ?when you are constantly in a defensive posture, you can seldom win.?[1]?While this philosophy has been embraced by business leaders, it has been adopted less enthusiastically by communications officers, particularly those responsible for investor relations. This is surprising given the growing success and influence of social and investor activists (see fig. 1), not to mention the significantly increased competition for capital in general.

It?s been our experience that many companies miss their best opportunity to create a competitive advantage in the global financial markets ? let alone maintain a level playing field ? by treating investor communications essentially as a compliance function. Among other things, this defensive mindset prevents companies from developing a strong ?investment brand? (see sidebar) that can better engage investors and enhance enterprise value.

Proxy Bar

Fig 1. Does not include those boards in which an activist was invited to join to prevent a proxy fight. Source: Financial Times, December 23, 2013

Think about it: would you allow someone else to define the value of your products and services to customers? Of course not! So why would you let someone else define the value you offer investors?

That?s essentially what you are doing when you only play defence in your investor relations strategy. And this defensive stance can play right into the hands of the activists you seek to avoid.

Over the coming weeks, we?ll take a closer look at the activist playbook and the ways in which companies can go on the offensive long before they find themselves in the crosshairs.

Defining the Investment Brand
In order to engage investors and enhance value more effectively through communications, we believe that companies must complement and support the compliance mandate of investor relations with sophisticated branding and marketing strategies. By utilizing fully the 3Cs of IR ? compliance, context, channels ? companies can create an authentic and differentiated ?investment brand.?

Among other things, a strong investment brand can cut through the daily noise of stock traders and enable a company to make genuine connections with long-term investors. The investment brand not only reflects the central essence of the company but speaks to the company?s competitive advantage.

3 Cs

[1] ?Sun Tzu ? The Art of War for Managers? by Gerald A. Michaelson & Steven Michaelson (Second Edition, 2010)




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