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Building Ongoing IR from a Reverse Merger
Building Ongoing IR from a Reverse Merger

Achieving recognition for a reverse merger; building investor support and an ongoing program

The Situation

This long-standing media company facilitating trade in China had gone public through a reverse merger and was trading over-the-counter. The chairman expanded the business model to two more offerings: first online followed by trade shows. While an excellent business move for the company, these actions created a confusing story for Wall Street. LHA’s challenge was to help management create a clear message supported by transparent reporting to increase Wall Street awareness.

LHA’s Solution

  • Devised a methodical investor relations program to educate analysts and investors to win sponsorship pending the client’s move to an accredited exchange.
  • Developed a platform through which investors could complete appropriate due diligence.
  • Created professional collateral material including a Fact Sheet, presentation and website that clearly and concisely described the product and business model.
  • Worked with management to determine upcoming milestones and appropriate metrics to enable investors to track management’s accomplishments.
  • Implemented a strategic press release program to educate the investment community about company progress.
  • Coached management in preparation for earnings conference calls to be archived on the website, creating a history for future potential investors to evaluate achievements.
  • Advised management on use of non-GAAP metrics to help the investment community evaluate company performance excluding stock-based compensation expense that required quarterly adjustments reflecting change in stock valuation.
  • Counseled management regarding guidance policy to increase transparency.
  • Initiated a nationwide effort to increase trading liquidity by publicizing management interviews with retail outlets.
  • Conducted an aggressive, systematic meeting outreach program: starting with professional investors able to invest in OTC companies; educating hedge funds and institutional portfolio managers about the company’s investment rationale; and marketing to sell-side analysts who might incorporate the client’s story into industry reports.
  • Incorporated national media program at various stages to support the IR efforts.
  • After listing on the NASDAQ, evolved program and collateral material to keep the story fresh and compelling for investors throughout the economic ebbs and flows.

LHA’s Results

Through LHA’s efforts, over a two-year period the client garnered coverage from two sell-side analysts increasing total net coverage by one analyst to three. During that period, trading volume increased from approximately 125,000 shares per day to over 450,000 shares per day and institutional ownership expanded from 45% to 75% including high-profile investors. LHA and management continued to manage effective ongoing investor relations enabling the company to conduct four tender offers totaling more than $150 million.

LHA Investor Relations is a leading strategic IR consulting agency. We partner with public and private companies to craft and implement effective, custom-designed IR programs that incorporate industry best practices. We are a leader in investor relations for small-cap companies for over 30 years. In implementing IR programs that build trust and transparency between our clients and Wall Street, we support capital market objectives by increasing awareness, managing expectations and enhancing reputations.

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