February2024Theequitystoryyouneedforthelong-terminvestorsyouwantSophisticatedinvestorsaremorelikelytoaffordacompanymoretimetoletitsstrategyplayout,evenduringvolatility.Butfirst,theyneedaclearequitystory.byHannesHerrmann,JamieKoenig,AnnaMattsson,andMarcSilbersteinTheoldadagethatyounevergetasecondchancetomakeafirstimpressionappliespreciselytoanequitystory.Investorswillreviewyourcompany’sequitystoryandmakeoneoftwodecisions:yes,thiscompanydeservesourcapital,orno,itdoesn’t.Somecompanyleaders—particularlyincasesofIPOsordivestitures,wheninvestorsarescrutinizingabusinessforthefirsttime—believethatmaybecouldbeathirdoutcome.Butmayberesultsinsloppymessaging:ifwejustincludelanguageaboutatrendynoncorebusinesslineorsprinkleintherightbuzzwords,thethinkinggoes,maybewecanattractinvestors’attentionorvalidateahigherstockprice.Itwon’thappen.Whileitmaytakeseveralmonths,acompany’smarketvaluewilleventuallyreflectthevaluethattheanalystandbroaderinvestorcommunityplaceonit.Moreover,eventhestrongestcompaniesexperienceperiodsofshort-termvolatility.Howpatientwillyourinvestorsbe?Large,sophisticatedinvestors—particularlyintrinsicinvestors,theinvestorsegmentwiththegreatesteffectonmarkets—arethemostinclinedtomaintaintheirpositionsthroughshort-termvolatilitycomparedwithotherinvestors.Yettheseinvestorswillavoidcompanieswhoseequitystor...
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