Building connections with investors whether you are listed or unlisted

As shareholder bases for unlisted companies continue to grow, transparent and effective communication with shareholders is becoming more vital than ever.

Private companies may have the advantage of more control over the financial and business information they disclose. However, it is equally important for them to keep their shareholders consistently informed, just like their public company counterparts. 

In fact, managing shareholder concerns can be even more difficult for private companies, as they must carefully control certain disclosures for competitive reasons. It's a delicate balance - sharing too much information risks it falling into the wrong hands, while sharing too little can result in unhappy shareholders. Moreover, private companies are not immune to shareholder activism. Private owners are also vulnerable to poor management teams, questionable reporting practices, operational and strategic disagreements, and other governance disputes which may result in disgruntled shareholders.

Therefore, it is critical for a private company and its board of directors to provide corporate information to reassure shareholders about their investment proposition and to prevent a potential shareholder activist situation. A contingency plan should be developed - one that understands their shareholders’ needs, motivations and triggers, which might include the following:

• Establishing a disclosure committee that develops and maintains a shareholder communication policy. This committee should include the authorised spokesperson for the company and the board, as well as the company’s general counsel. It is important that the committee meet often to ensure that its communication plan is consistently upheld, assess the quality of information flow, review shareholder feedback, and ensure all targeted audiences are contacted. 
• Creating a response team made of investor relations professionals that understand how to effectively communicate with shareholders. 
• Developing communication channels that are suited to different shareholder groups. These channels should have tailored messaging, planned timing, and match the tone to address the unique expectations of each shareholder group. 
• Monitor shareholder sentiment. This can provide early cues to when shareholders are becoming dissatisfied, raising concerns, or expressing enthusiasm. This also allows companies to be proactive by controlling issues when they first arise or capitalising on positive sentiment. 
• Leverage testimonials from shareholders or respected, independent voices to endorse the company’s actions, strategy and leadership. This will help reinforce the company’s position whilst improving credibility.
• Quick access to capital raising opportunities: PrimaryMarkets provides capital raising and trading hubs to provide for shareholders of private companies, including employees and early investors.

If you are looking for an effective platform that helps to establish and maintain a response team, have two-way communication with your shareholder, and control shareholder sentiment, consider booking a demo with Diolog!

‍