11 February 2016

IR Managers: Think your firm has no peers? Think again!

I’ve heard it time and time again.

“We cannot target investors based on a peer analysis because we…
…have no peers
…no direct peers”
…no local peers”
…no peers of the same size”

To you that subscribe to this view I would like to challenge your definition of a peer. Whilst in your eyes a peer is a company who, at the bare minimum, is in the same line of business as you are, consider for a moment that to an investor a peer is any firm that also offers a return on investment (ROI).

Let’s test that definition using a day-to-day example. Take:

  • a supermarket
  • a cinema
  • a smoothie bar
  • a café

Would you consider them peers in direct competition with each other? Probably not. In fact the cinema and café could even be considered enablers, rather than competitors, to one another. Now let’s say you have $100 and are hungry and in front of you are all four same vendors. Each of them could legitimately put up a fight for a share of your $100 – could they not?

  • the supermarket will probably give you the widest range of options at the cheapest prices;
  • the cinema may be your most convenient option for fast food en route to a movie;
  • the smoothie bar will offer a fresh and healthy yet still wholesome alternative to all the others; and
  • the café will offer the prospect of warm food served with a smile.

In other words these four may not be direct business peers to each other BUT in your eyes at that point in time, they are ‘peers’ because each of them has something you may want. An acceptable return (food) on your investment ($100).

Similarly, two listed companies may not be direct business peers BUT, if in the eyes of an investor both offer the prospect of ROI based on some common criteria, then both could be considered peers. For instance, as a Finance stock, if you can demonstrate to an investor the importance of Blockchain technology to your future growth, then suddenly you may be able to compete for a bite of two slices of that investor’s pie; the one reserved for Finance stocks and the one reserved for Tech stocks.

At the recent annual Australasian Investor Relations Association (AIRA) conference I gave an example which resonated with several IROs:

Company: FIRST Advisers (IR consultancy at its core)
Business Peers: Let’s assume none for this example
Structural Peers: Law firms – similar revenue model & relationship with clients
Cultural Peers: Tech firms – same innovative culture which drives product development

Peer Analysis: Let’s say we identified and analysed the shareholders of FIRST Advisers’ Structural and Cultural peers and discovered that one investor (Investor A) has a small investment in a law firm ‘XYZ’ and a sizeable one in a tech firm ‘YZX’. Although Investor A isn’t known to be invested in a like for like business peer, I would treat them as a target and devise a strategy to demonstrate FIRST Advisers’ investor proposition based on

  • a revenue model which is similar to that of law firm XYZ; and
  • an innovative culture which is similar to that of tech firm YZX.

In conclusion, a peer is any firm that has an attribute in common with you which can be utilised by an investor to base a comparison on.


Creative peer analysis is a powerful tool ahead of a deal or non-deal roadshow for EVERY company!

So I urge you to think strategically about your peers and if you still think you have no peers, challenge me back.

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