As part of the 2019 MEIRA Practitioners Report produced in conjunction with Carter Murray, several interview with leading Investor Relasions leaders were conducted. Below is an extract from the interview with Kay Bommer, General Manager - German Investor Relations Association. To access the full report, please complete the form below.
From your perspective, what constitutes good IR?
There are three elements that constitute good IR. Firstly, a good IRO needs to be a generalist. They need to understand how capital markets work, understand why you are doing IR i.e. getting a fair valuation in the market, and you need a good and sound financial understanding (P&L, BS, how do analysts and investors value a company, why they need certain information). You don’t need to be an accountant or technical specialist but need some understanding.
Secondly, you need a legal understanding. You don’t need to be a lawyer but you must understand what needs disclosing, particularly in Europe with the amount of regulation that companies have to navigate around.
Finally, being an extrovert is hugely advantageous as well as having strong communication skills. We explain shares, we don’t sell them. We are the company spokesperson and need to be market facing.
What backgrounds make someone a good IR professional?
Background is not the primary thing we look at – approximately 50% of IROs in Germany have a financial background, 40% have a communications background and 10% have a variety of backgrounds. I know people who studied biology and history and are now brilliant IROs. A key criteria for success is the need to understand what the company is doing. Equally as important is the need to have gumption and stand up for your views, and always be curious. So, I am generally more open minded about backgrounds and particularly in Germany where there isn’t an oversupply of candidates, we need to look outside the box.
From a company perspective, what constitutes good IR?
A multi-task role. An IRO is not someone whose sole responsibility is to keep the Securities and Exchange Commission off your back. They do a lot more. And not just compulsory things like regulatory announcements but they look beyond and look ahead. They must understand sentiments in the market, be an adviser to the board, how the market will perceive certain strategic decisions. They act more of an adviser than just a spokesperson. They need to understand what and how analysts and investors think.
To read the full report, download the 2019 MEIRA Practitioners report.