The key to a European roadshow is to think local, says James MacGregor of Abernathy MacGregor
Q: What’s the best way to approach a non-deal roadshow in Europe?
A: Do you really need to go to Europe? Probably. Investors there, and everywhere, can buy your shares without knowing you. But there, perhaps even more than in the US, the investors you want most really value face-to-face exposure to management. So why only probably? Because London-to-Frankfurt-to-Zurich-to-Paris isn’t like Chicago-to-Dallas-to-LA-to-San Francisco. You need to think like a skilled tourist.
First, pick your spots. Apple can draw an audience anywhere; for everyone else, the particular mix of market cap, industry, track record, risk profile and business outlook will play better in some markets than in others. We know one firm that found only London and Zurich amenable; another found half a dozen worthy ports of call.
Where’s right for you this season? Your investment banker will have thoughts (self-serving, maybe, but he or she won’t waste time where there aren’t commissions to be won). There’s at least one first-class local IR firm in every major European market. And you almost certainly already have investors in some of those markets; their perspective is clear, and they have a vested interest in your success in their market.
Second, engage a tour guide. Let’s say you’ve chosen London (virtually a must-visit), Frankfurt and Milan, with maybe a side trip to Amsterdam. In every major European market, it’s expected that a major financial institution will sponsor and organize your visit. All the major US and European investment banks/brokerages do this capably.
Unless you’re very practiced at this, don’t even think of going it alone. Again, get some local input – the most esteemed bankers who draw the most interested crowds vary considerably from place to place.
Third, respond to the local environment. Let the banker choose times, venues and so forth. But second-guess the invite list (there as here, some non-clients of the banker would welcome an invite). As to what you’re going to say, more local input is required. Yes, your story is your story, and it’s the only story you ought to tell. And yes, investors do speak a nearly universal language these days.
But some story components matter more in some financial capitals than in others – in Zurich, for example, stress earnings-based rather than cash flow-based metrics, and expect to be grilled on management compensation. Showing proper attentiveness to local priorities goes a long way.
With the right tracking software, you’ll know in a week or two whether your European roadshow triggered any quick buy or sell decisions. Trading desks and algorithms are prominent there, too, but you won’t really know your impact for another year after that. The European investors you want most still think longer term. They prize continuity and build their judgments cumulatively. You don’t really become a ‘buy and hold’ until you’ve shown you’re also a reliable ‘see you next year’.
James MacGregor is co-founder of Abernathy MacGregor in New York
