By Elin Raymond (article published in Twin Cities Business Monthly)

Despite sagging figures–the local high-tech company had just posted its second consecutive quarter of diminishing returns–the company’s brand-new CEO offered hope at the annual meeting. He was experienced and decisive, and during his brief tenure on the job had already focused the company’s business and implemented a work force redeployment plan–the “right stuff” for a company that was out of shape.

Judging from the hasty dispersal of investors, employees and friends at the meeting’s end, however, the CEO’s message of hope for company shareholders did not get through. The unduly lengthy meeting lacked handouts or visual support; listeners found it repetitive, uninteresting and painful.

At the elevator of the hotel parking ramp, a stockbroker inquired of another attendee, “You were at the annual meeting, weren’t you? What did you think of it?”

“It was overly long,” she said, trying to be politic.

“I thought it was the worst meeting I’ve ever attended,” he said. “You can see why the company’s stock price is so low.”

He might not have realized it, but that broker was talking about the power of communications.

The white noise factor

Build a great product or service, report year-over-year increases in growth and net income, or announce a solid strategic plan to turn around the company’s fortunes, and they—investors, analysts and the financial community—will rally round. Right? Not exactly. First, consider the white noise factor. It takes a concerted effort to stand out from among the approximately 11,000 public and more than 600,000 private U.S. companies vying for attention from the financial and investment communities. “It’s absolutely numbing, the number of companies that try to get a hold of me,” says Mark Bartholomay, Dain Bosworth’s vice president of equity research for emerging growth companies.

In this horde, your organization won’t stand out simply because it has performed well or rolled out the right plan: So much for the efficient market theory. Or, to put it another way: Your stock price, or the value of your company, equals what the investment and financial communities know and understand about your organization.

“Good communication is absolutely critical,” says Donald Goldfus, chairman, president and CEO of Apogee Enterprises, the parent of such entities as Harmon Contract, Harmon Glass, Viracon and Wausau Metals. He has learned that in order to achieve greater shareholder value, the investment community “must understand your company and its driving force: what makes it different, what your industries are all about, how you’re strategizing within those industries, what your core competencies are, what your corporate culture is.” Concludes Goldfus, “You should market your company and its stock as you would a product.”

Communicating well is money in the bank

If your company’s financial appeal or share price doesn’t reflect the underlying worth of your organization, it’s symptomatic of a lack of appropriate information—a lack of marketing. It is management’s job to impart the facts and figures that will capture attention and demonstrate the true value of your company. Making no noise whatsoever just won’t do it.

What difference does it make if bankers, analysts, portfolio managers and so on have never heard of the company? None, if the company is funded by a free-flowing stream of family money or if its management does not plan to grow. Those companies’ executives don’t have to expose themselves.

On the other hand, those that want to gain corporate girth using other people’s money have to get the word out. Successfully obtaining venture capital or an appropriate line of credit, making a private placement of your stock, or staging an initial public offering won’t happen by simply being there. To open pocketbooks and shake out the change, the company’s story must be presented in a compelling way.

Seizing the information advantage

How can your company attract attention from the banking and investment sectors? Quite simply, by seizing the information advantage: by providing financial, analyst and investor constituents with the kind of information they need and want in order to fully understand your company. These groups have found that the accessibility of quality information about a company and its stock is directly related to the success of their investment. Savvy companies vying for investment dollars know that providing the right kind of data can make the difference in attracting underwriters and funding.

Rick Hartfiel, chief financial officer for fast-growing Caribou Coffee and a former investment banker with Wessels, Arnold & Henderson, knows from his experience on both sides of the financial tables the kind of profile the investment community looks for in a prospective investment. “It’s all the things that make great companies: excellent leadership—especially in an early-stage company—a CEO or president who can give credibility to everything the company is undertaking, who can articulate the vision, the strategy and how the plan will be executed,” Hartfiel says. “The company should have a good market opportunity and the capacity to achieve growth.”