When a company seeks to strengthen and enhance its shareholder base while adding new investors it often does so through investor targeting.
What is investor targeting? Generally speaking, it entails identifying and engaging investors to create more value for your company, and your shareholders. Meanwhile, how it works often involves a multi-faceted strategy in which you’ll gain a better understanding of your investor landscape.
Why Investor Targeting is Important
One of the most obvious reasons for investor targeting is to tap into new pools of capital. But there are several other reasons, including:
- It’s a proactive way to engage with investors
- It’s a way to attract the right kind of investors
- It helps to maximize shareholder value
- Effective investor targeting can draw investment
Many investor research firms have dedicated investor targeting services that companies call on when starting their investor targeting strategy.
Who Is the Focus of Investor Targeting?
Attracting large institutional investors is the primary focus of investor targeting. But other sources of investors, such as pension funds and registered investment advisors are also considered during the investor targeting process.
Investor targeting is more established in the U.S. than in many other parts of the world, including Europe, but those involved with the strategy often take a global approach for finding potential investors.
What are Some Investor Targeting Strategies?
As mentioned, many companies take a global approach to investor targeting, which is why it’s important to find investor research outsourcing (IRO) firms that have an excellent understanding of international markets. But identifying and approaching potential institutional investors involves other strategies, as well.
- An important first step is becoming familiar with your company’s shareholder base. Learn who is attracted to your stock (and why), determine the types of investors you want to attract, and determine who are long-term and short-term investors.
- Once you determine who are potential investors, develop a strategy for approaching them.
- Truly understanding the profile of your targets helps you to know how to approach them directly and thoughtfully.
- While many companies look to build their investor base by approaching investors who are best suited to buy their stock today, a more sophisticated approach is to evaluate how changing conditions will make your company attractive to groups of investors in future.
A sound investor targeting strategy can help your company to not only broaden its investor base but also help it to remain relevant in years to come.
Guest post courtesy of Patricia Baronowski-Schneider – President/CEO of Pristine Advisers – www.pristineadvisers.com