Creating the ‘equity story’: the essential tool for attracting investors

Few moves involve such a momentous change for a company as going public. It is a goal that involves risks: a stumble in the plan or a false exit can be a burden for its future development.

But becoming a listed company also means obtaining financing, resolving the generational handover in a family business, achieving greater returns for shareholders, increasing prestige and brand recognition, facilitating internationalisation or attracting more talent to the company. For such an important moment it is necessary to have the best lawyers, the best financiers and the best auditors, but also the best advisors in communication and reputation. Why is communication so important?

Because potential investors will be convinced if there is a story behind the company that convinces them, a story that encourages them to entrust their money to a new player on the stock exchange. All the company’s economic data, balance sheets, market analyses, forecasts, technical arguments and strategic plans must come together in a solid, comprehensible and persuasive narrative for the target audiences.

The specialised press knows how to distinguish when an authentic equity story that projects a positive vision is born. This vision in the media reinforces the likelihood of success and the value of the action.

Ricardo Cuevas and Alberto Mendoza

Economic science is paying increasing attention to the narratives of private companies, the messages of central banks and the states of the economy in general. We are not talking about simple narratives that interpret a situation, but about narratives that act as real drivers of economic events. Nobel laureate Robert J. Shiller, author of Economic Narratives, explains that narratives influence decisions and set trends in all types of markets, especially stock markets.

In whose hands is this management of expectations, reputation and moods to be placed when an IPO is presented? A high-precision strategy designed by experienced professionals is undoubtedly necessary. Because as soon as there is public exposure, the risk of noise increases, and even more so as the company’s intentions become known.

Updating the company’s corporate story will become the master formula for arousing investor interest

This is where the equity story comes into play: in order to be a success story, a series of clearly and attractively constructed elements must be designed. For example, the company’s strengths must be emphasised, as well as the new opportunities it represents in the market. It must also prove to be able to get right the solutions it brings to its sector and the possibilities it opens up for investors. At the same time, it must send a message of security and pre-empt concerns about existing threats.

In addition, the company must find a unique and credible voice in the story it conveys to its stakeholders. For example, family businesses have a unique narrative, often rooted in a long history of the country or one of its cities or communities. They also have recognisable figures who have founded and managed the firm through several generations.

All companies have an essence that makes them unique, whether it is the story of their evolution, growth, innovation, value proposition, corporate style or the positive impact they have had on society. The equity story should reflect that purpose, mission and vision of the company, but with a strategic focus. The equity story shows the profitability and the current financial reality, the business model, the competitive advantages, the growth strategy, the future objectives and why it is a good investment alternative.

This is the narrative that should accompany the company on its road show with institutional investors and other stakeholders. Alongside this narrative, specific preparation for communicating in this scenario must be taken very seriously by the company’s managers and spokespersons. Increasingly, media interest is moving beyond the CEO and CFO to include people who lead in areas related to sustainability or corporate governance.

In short, from the moment a company begins to consider a possible IPO, the equity story must be considered a fundamental feature of its personality, a feature that will serve to open the doors to the stock market, persuading and even winning over investors, analysts and public opinion with its value proposition.