'Keep market and investors informed'

British experts advise Israeli companies seeking UK investors.

Two of the most important words in the contemporary business lexicon are 'communicate' and 'information.' This is what emerged at a breakfast meeting organized by UK Trade & Investment and hosted last week by British Ambassador Tom Phillips. In presenting guidelines for Israelis listed or about to be listed in London, a team of experts talked about investment banking, regulations and legalities, relations with the media and the market and the London Stock Exchange. Each expert emphasized the need to communicate and to keep investors and the market informed. "Think very carefully about the cash needs of your business," said investment banker Simon Bridges, a director at Bridgewell Ltd. Although British investors in newly floated companies have deep pockets, he said, it was important to continue servicing and communicating with them. With regard to cash needs, Bridges warned that investors would not be happy if cash needs were underestimated. "Plan carefully," he said, "so that you won't have to come back six months later, cap in hand." Market conditions and investor appetites can change rapidly, he explained, which is why it is usually a good idea to take money when it's available. "If the money is there, you take it." Alluding to the rapid strides that Israeli companies have made in the London market in a relatively short time span, Jonathan Morris, a partner at Berwin Leighton Paisner, said: "If this was 2003, we wouldn't be sitting here and talking about the past IPO for Israeli companies." Cultural differences between countries are evident on many levels, including the way they do business. Morris focused on corporate governance, and said that in England it is customary for two of the directors to be non-executive. Israelis, he said, tend to view this as a nuisance, a loss of company control and an unnecessary expense. But a first rate non-executive director can help a business to grow by introducing the company's representatives to the right people, he said. Morris stressed the need for a proper, timely and accurate flow of information so that directors can make the right decisions. He suggested that Israeli companies consider board training and evaluation. "All directors should update their skills and knowledge," Morris said, adding that the board should have a regular, formal evaluation of its performance on both group and individual levels. It would be preferable if this evaluation were external, and if the conclusion is that the composition of the board is not right, this factor should not be ignored, he added. Speaking about rules and regulations, Morris said: "Explaining is fine, but complying is better." Because so many emerging market companies are coming to London and people are often unsure about them, how they present themselves becomes all the more important, said David Westover, the director of the emerging markets unit of Citigate Dewe Rogerson, a public relations company specializing in financial and corporate communications and crisis management. "Communication has to be very focused, and it is important to manage the expectations of your investors," he said. Personal relationships, Westover added, are crucial, especially when communicating the company's story and prospects to investors. "If you have bad news to communicate," he said, "communicate it all at once and make it clear," rather than make it appear that the company was forced into the disclosure. There are regulatory requirements about communication, but, Westover said, it was important for companies to take more initiative in communicating "so that there's a constant flow of information in the market that reflects on the company's performance." Israelis going to London with big business projects should take the opportunity to meet with media, he said. "They may not write about you immediately, but they'll get to know you." Steven Chung, a Bridgewell expert in mergers and acquisitions, spoke of the importance of communicating company strategy, especially when making an acquisition. He also issued a warning in connection with cash offers. "You should only announce a cash offer if you have the cash in the bank." Directors should carefully monitor a company's circumstances, so that they can be aware of when announcements must be made, said Paul Miller, also a partner at Berwin Leighton Paisner. Miller agreed with Morris about the role of non-executive directors, saying that they were neither an impediment nor window dressing. "They're essentially advisers." As for keeping the market informed, Miller advised to keep a paper trail of decisions about whether to make announcements, "so that if there is an investigation you can show the authorities that you were acting in good faith." "You can't disclose price sensitive information to an analyst unless you make a disclosure to the market at the same time," he said. Graham Dallas, senior manager of International Business Development on the London Stock Exchange, said to establish as much liquidity as possible. "The more liquidity in your stock, the better the valuation of your stock," he said. "Liquidity protects against unnecessary volatility." Dallas also emphasized the importance of communication. "A stock exchange is where two things change hands - one is money and the other is information." Peter Stephenson, trade and investment director at the British Embassy, said that 25 percent of all listings on the Alternative Investment Market (AIM) last year were from Israel. Although relations between the UK and Israel were good when he previously served in Israel in the early 1990s, said Phillips, "this whole area of commercial relationship did not exist."