Why Seamlessly Integrating PR and IR Will Maximize Value for Shareholders

Maximizing shareholder value has long been the purview of investor relations, but the most successful companies make it one of the goals of public relations as well. In fact, when PR and IR work together, great things can happen for the company — both on Wall Street and Main Street.

PR versus IR functions

Before discussing why it's necessary to integrate these two critical communications functions, it's important to understand the similarities and differences between them. While both do involve communications, they focus on different targets and utilize slightly different methods, making them the perfect companions.

Of course, PR focuses on communicating with the general public, while IR keeps the communication lines open between the company, investors, financial analysts, and other key stakeholders. However, sometimes these two groups overlap.

In fact, an investor may transition from being just another member of the general public into a prospective shareholder and then a shareholder. In the process, they also transition from being the focus of public relations to being targeted by investor relations — just one reason why it's so important that IR and PR be relaying the same messages consistently. However, increased clarity and consistency aren't the only benefits of collaboration between investor relations and public relations.

Where the two-way streets of IR and PR intersect

Sometimes IR professionals may find they have fallen into a rut that includes the quarterly cycle of earnings releases and little else. However, a successful investor relations team does far more than just issue press releases about their company's earnings results every quarter. IR professionals should constantly be in contact with current and prospective shareholders, fielding any questions an investor might have about the company. Critically, investor relations should be a two-way street.

The two-way street of public relations communications may seem more obvious. Not only do PR professionals issue press releases and contact media outlets for a variety of purposes, but they also handle incoming calls from journalists. Amid all this back-and-forth traffic is a wide array of missed opportunities for companies whose IR and PR functions don't collaborate. 

Rose Levy, SVP and head of Business at Pace Public Relations, has worked collaboratively with several IR teams throughout her career, managing acquisitions, IPOs, countless funding rounds, and more. She has seen some clear benefits that only occur when IR and PR trust each other and work together.

"In my experience, when the PR & IR teams work in collaboration as the rule, not the exception, it results in more transparency and an established trust that ultimately leads to stronger results," she explained. "The trust piece is really key. When both teams consider the other team as an extension of their own capabilities, the creative storytelling that comes out of it from both ends can result in not only an increase in media coverage but more of the right stories hitting the right audiences at the right time – which, at the end of the day, is really everyone’s goal from the beginning."

While establishing trust between public relations and investor relations teams is just the first step, it sets the stage for a whole host of benefits that can’t be realized without it, and here's why.

1. Collaboration enables the sharing of skill sets

In some cases, investor relations officers might assume public relations professionals lack the business acumen to understand the importance and best practices required by IR functions. On the other hand, PR pros might think IR executives aren't savvy enough to connect successfully with all investor types.

While these views are essentially stereotypes, the reality is that stereotypes sometimes have the tiniest kernel of truth because they have to come from somewhere. For example, a study conducted in 2014 found that investor relations professionals tend to have a financial or business background.

In other words, IR is primarily a financial function rather than a communications function. Thus, IR professionals could indeed learn a lot from PR experts about how to communicate effectively, especially when it comes to newer avenues of communication like social media. On the other hand, PR pros could learn much from their IR counterparts about reporting in line with regulations.

By combining their skill sets, investor relations and public relations officials enjoy the best of both worlds. This collaboration takes the writing abilities, inclination for apt timing, and social savviness of the PR executives and combines it with the regulatory knowledge and business-related expertise of the IR officers. 

As a financial media entrepreneur, Jane King, CEO of LilaMax Media, works with both IR and PR professionals, so she sees clearly how these groups can and should combine their skill sets for better results.

"I think it's important that they work together on messaging,” King said. “Also, if an IR firm releases a quarterly earnings report, for example, that should be shared with the PR firm. The PR firm may want to rewrite it to be more consumer-focused, but they should work in tandem."

2. Syncing IR and PR helps avoid running afoul of regulators

Collaboration between PR and IR is also a necessity for regulatory reasons. The Securities and Exchange Commission has very strict rules and regulations regarding corporate communications, including the way those messages are worded, the timing of their releases, and more.

For example, founders of startups or small-cap companies without a lot of PR history should be aware of the required quiet periods around earnings releases and other events that could impact a company's stock price. For example, a company may not share any news that could impact its stock price during the blackout period around the time of their initial public offering.

The blackout starts after the company and its underwriters file the registration papers for the IPO and lasts through 40 days after the stock starts trading. Additionally, executives of publicly traded companies can't make any comments during the four weeks before the end of their fiscal quarter.

In some cases, an unofficial quiet period may be in order, and it will be up to the investor relations team to decide the optimal length of such a period. However, in both cases, it is critical that the PR team be aware of and adhere to the quiet period established by the IR team — whether it's of an official length as required by the SEC or whether it's an unofficial period designated by the IR team.

3. Sharing resources gives greater leverage, boosting visibility and control over the narrative

Of course, communications is a critical piece of both public relations and investor relations, so many of the required resources are the same. While PR and IR both send out press releases, they both do much more than that. For example, public relations often pays for placements for content marketing to circulate the company's name in trade publications, the broader news media, and other websites or journals.

However, IR can also leverage those placements for the benefit of investors. Investor relations can share links to articles about the company that have been published to increase awareness about what it does and the strategies it utilizes. As more investors learn about the company, its shareholder base will likely grow, increasing its valuation and boosting value for shareholders.

Additionally, IR and PR are often faced with the same or similar questions but from different angles. For example, public relations professionals might be asked for opinions on current industry trends. Meanwhile, investors might ask the IR department what those trends mean for the company from a financial standpoint, including how they will address them.

When the IR and PR departments continue to collaborate over time, sharing knowledge and other resources, the company benefits because it's doing more with the same resources by leveraging them for greater exposures.

Final thoughts

It's the job of both IR and PR to control the narrative surrounding the company — including doing damage control if it becomes necessary. However, for some, it might seem like these two necessary functions share no common ground.

After all, investor relations revolves around the earnings cycle, while public relations focuses on product launch cycles. At the end of the day though, the goals of IR and PR remain the same: spreading the word about the company and why its products would make a good investment, both from the consumer's perspective and from the investor's.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.