M&C Saatchi
Delivering a virtual Capital Markets Day to communicate a compelling investment story and restore investor confidence
Background
M&C Saatchi is one of the world’s best known creative agencies. Founded on the principles of an entrepreneurial culture, they are famous for many memorable campaigns for their public and private sector clients around the world.
Following a prolonged period of mostly uninterrupted growth, the Company’s shares rose and peaked at £4 in 2018. In August 2019, several accounting errors came to light and the Company acknowledged that £14m of profits had been misstated in prior years. PwC was brought in to carry out a comprehensive independent review which led to an extensive board restructure and the shares falling to a low of 31p in March 2020.
The new board immediately undertook a comprehensive business and strategic review, recognising the need to restructure the Company’s governance and business operations, rebuild momentum and restore investor confidence. They concluded that the current share price did not accurately reflect the strength of the underlying story and the Company’s prospects, capabilities and ambition. The company announced it would hold a Capital Markets Day (CMD) to communicate the new business strategy to investors.
Engagement
h2glenfern was introduced to the Company by one of the non-executive directors. Their remit was to help validate the key strategic objectives and messages and assist the new management team in preparing and presenting their updated strategy to be delivered to the investment community at the virtual CMD under the heading of “Navigating, Creating and Leading Meaningful Change.”
In preparation for the update, h2glenfern worked extensively with the CEO, CFO, and other senior business heads. Their focus was to help articulate the scope and extent of the restructuring that was already well underway and the significant growth opportunities that lay ahead.
The project was executed in several stages. Stage one was to work alongside the executive team to help develop and validate the key messages underpinning the business strategy and financial plan and create the supporting presentation materials. Stage two was to advise on the most appropriate structure, timing and format for the successful delivery of a virtual Capital Markets event. Stage three involved preparing the management team to deliver the compelling strategy and financial plan to emphasise the opportunities whilst alleviating any remaining concerns investors may have had. h2glenfern also helped the management team prepare for extensive Q&A and highlight the key areas where commentators were likely to probe.
The final stage was to help the Company identify potential new investors who might be attracted by the Company’s enhanced financial prospects. h2glenfern built a financial model based on the Company’s proposed future guidance. By extracting the key forward metrics, h2glenfern deployed a quant-based algorithmic approach to identify the universe of asset managers and funds whose investment criteria were the closest match to the Company’s future financial characteristics. This process highlighted 11 potential new investors who were not current shareholders.
Outcomes
The CMD was delivered successfully to 100 virtual attendees. The presentation effectively showcased the scale of the opportunity, the strength and depth of the global businesses and the value of the Company’s purpose, vision, culture and ambition.
It outlined the exciting dynamics and characteristics of the addressable markets and the significant business opportunities that lie ahead. The presentation also provided much-anticipated detail on the significant changes that had already been made to the operational and business structure and leadership team whilst outlining the strategic and financial objectives, actions and KPI’s. This gave much-needed guidance on the Company’s expected future outcomes.
The CMD update and successful investor engagement strategy have resulted in the Company delivering on its key short-term objectives. The strategy presentation served as a highly effective statement of the Company’s purpose and goals for all its stakeholders. The ‘new’ leadership team was successfully introduced to the Market, engaging investors and restoring confidence. New potential investors were identified to help stimulate investor demand. Since the strategy update, the shares have risen 70% and are now trading close to a 16-month high.
Link
https://mcsaatchi.com/investors
(Published 17/03/2021)
