Capital Markets - What are they looking for from you and your company?


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Capital Markets - What are they looking for from you and your company? by Scott Richardson Brown - CFO - Acsent Resources

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Capital Markets - What are they looking for from you and your company?

  1. 1. Capital Markets<br />What are they looking for from you and your company?<br />
  2. 2. It doesn’t matter what you think<br />It doesn’t matter what you’ve said<br />It matters what the market thinks you’ve said!<br />
  3. 3. How you manage the markets<br />
  4. 4. ....because you have:<br /><ul><li>A visible share price & therefore valuation
  5. 5. Large and numerous shareholders
  6. 6. No control over who invests
  7. 7. To be careful with information disclosure, manner and timing more prescriptive
  8. 8. The media who takes a close interest in our news.
  9. 9. Analysts who write on your business.
  10. 10. Constant ‘Speculation’!</li></ul>So you need to manage the market carefully.<br />You are now or might soon be a publically listed company, so what…<br />
  11. 11. The market for me consists of two main constituents:<br /><ul><li>Analysts
  12. 12. Investors
  13. 13. Institutional & Retail</li></ul>What do they do?<br /><ul><li>Research/recommendations
  14. 14. Long/Short</li></ul>What is “the market”?<br />
  15. 15. Opportunity:<br /><ul><li>For upside & value creation
  16. 16. At the right risk/reward ratio</li></ul>Delivery:<br /><ul><li>Against targets
  17. 17. Against expectations</li></ul>Outperformance!<br />Most importantly, you must retain their confidence no matter what.<br />What is the market looking for?<br />
  18. 18. Macro economics<br />Sector economics<br />Expectations and guidance<br /><ul><li>Communications.</li></ul>Actual performance & history<br />Liquidity<br />Management/employee & business credibility<br />What are the key drivers of your share price?<br />
  19. 19. We all want our share price to perform well<br />Avoid getting fixated with daily share price movements<br />We will always be undervalued in your own eyes, particularly as Directors of the Company!<br />The share price represents the future not the past<br />Liquidity is your friend<br />Everyone has to avoid share price fixation<br />
  20. 20. Liquidity helps your share price to best reflect the true value of your business<br />Low trading volumes put off investors<br />Free float has to be large enough too<br />Strong communication with investors and the press create and enhance liquidity<br />Why is liquidity important?<br />
  21. 21. The market is always hungry for news<br />Feed it only with high quality timely communications<br />You have to make sure your messaging is consistent<br />Control the market expectations, don’t let them control you<br />Don’t let hype overtake you, performance is the key<br />Strong and clear communication is vital<br />
  22. 22. One additional frequently asked question<br />
  23. 23. Should you list in the US?<br />
  24. 24. No doubt that US investors are more likely to understand certain business sector better, prime example is technology…why?<br /><ul><li>America has more technology companies than Europe
  25. 25. Peers largely based in the US
  26. 26. Few comparables in UK/Europe</li></ul>But is there a valuation gap?<br /><ul><li>A myth or reality</li></ul>Valuations, US vs UK?<br />
  27. 27. No proof either way, it has swung both ways recently<br />Historically though, the US market has, on average, traded at a premium to UK<br /><ul><li>Both across all sectors and specifically for technology stocks</li></ul>Past 10 years have seen a consistent and steady convergence<br /><ul><li>Both across all sectors and specifically for technology stocks</li></ul>In fact in 2009 UK tech stocks traded at a premium to US tech stocks<br /> A myth and a reality!<br />
  28. 28. If there is a valuation gap then would a US listing help to close it?<br />Are US funds put off without a US listing?<br />Could your employees benefit?<br />Would it cost you much?<br />There are however as many arguments for a listing as against<br />The only real way to know the true benefit would therefore be to get a listing....<br />Listing – Should we have a US listing on NASDAQ?<br />