In 2025, public companies continue to face increasing challenges as they try to attract new institutional shareholders.
Challenges
The sell-side continues to reduce budgets and headcount, resulting in less support in the form of non-deal road shows and conferences. They primarily target high-commission paying hedge funds, as opposed to long term mutual funds. Additionally, many investors relocated outside of major markets post-COVID or continue to work from home. The trend towards passively managed investment products like ETFs make it increasingly difficult to find actively managed incremental buyers.
Direct Solution
Increasingly, public companies need to employ a “direct” solution to attract new shareholders. The sell-side, like a distributor model, is an important free tool. But a proactive approach helps close the gap, by targeting investors outside of major markets who only meet strict criteria. Virtual meetings have enabled companies to target high quality firms in markets outside the USA. Firms like Stonegate start out with your priorities in mind, systematically targeting the best possible investors. Working in collaboration with your internal team, we establish concrete KPIs and goals.
In Practice
Choosing the right investment managers and mutual funds to target is the easy part. Even if issuers purchase data service, it’s very difficult to determine which contacts to reach out to and establish a relationship. Firms like Stonegate can help coordinate the introduction process from targeting to close. Top tier companies get in a rhythm, each quarter filling their sales pipeline with new quality leads while at the same time moving their prior meetings closer to becoming shareholders.
Benefits
Companies that conduct direct outreach to investors can enjoy numerous benefits including a higher multiple, increased liquidity, and ultimately a more stable longer term shareholder base. Your team’s time is valuable, so a direct approach can help ensure management is only meeting with top tier targets. Issuers also establish a direct link to Wall Street and receive more real-time feedback on market perception.
Find a Trusted Partner
It is critical to retain a trusted partner, like Stonegate, to help navigate the current environment. After helping hundreds of public companies over 20 years, our team is “starting on third base”.
