The Challenge
Change the investment community’s perceptions of a major industrial company, with a more than 100-year history of manufacturing construction equipment, thereby leading to a more appropriate valuation on Wall Street.
Strategy
Use the opportunity provided by the naming of a new CEO to communicate the company’s changed strategic vision, market opportunities and growth objectives.
Tactics
- In the news release announcing the new CEO, reference was repeatedly made to the company’s four strategic markets and their attractive growth characteristics, as well as a change in corporate structure to leverage growth opportunities.
- An extensive “road show” was organized to introduce the CEO and new corporate structure.
- We advised the CEO to appeal to research directors (and, where appropriate, investment bankers) at sell-side firms that were covering the company to request that the “diversified industrial” rather than “construction equipment” analysts follow the company.
- Targeting programs were utilized to identify “new” institutional investors who might be amenable to the company’s changing dynamics.
- Media interviews with the CEO in outlets such as the Wall Street Journal, CNBC, and Bloomberg TV were used to convey the new message.
- The annual report and even regular earnings releases were structured to emphasize the changing nature of the company’s markets and business.
Results
- Share price enjoyed an approximately 15% increase in the first 90 days, appreciating faster than the S&P 500 during the period.
- Several “new” institutions established investment positions.
- Two of the major brokerage firms assigned new analysts more attuned to the company’s changing business model.
