IR: do it yourself or outsource? Many SMBs have retained investor relations agencies to assist with IR-related duties. This can free CFOs to focus on core operations, but they may conclude that some IR functions still need oversight from within the company.

• Author: Palmer, Ian
• Position: INVESTOR RELATIONS

For Jody Phillips, CFO of Gainesville, Fla.-based Exactech Inc., a Nasdaq Market-listed firm, retaining an investor relations (IR) agency was simply the right thing to do.

When Exactech went public back in 1996, the developer and maker of bone-and-joint restoration products lacked the investment community contacts needed to get its story out. The company's desire to find a receptive audience ultimately led it hire Hawk Associates Inc., a Key Largo, Fla.-based provider of IR services.

Phillips said that small to medium-sized businesses (SMBs), such as Exactech, could theoretically handle their IR duties in-house, but he believes SMBs are better off sticking to their core competencies and leveraging the strengths of qualified outside help.

"We've been pleased with the work that [Hawk has] done for us," he said, "primarily due to getting us sufficient meetings and having good targeted potential investors that are the types of companies that would invest in companies our size."

Phillips, whose business has about 215 employees, is representative of the many executives who have had good experiences with IR consultancies. CFOs, other management-types and IR agencies say that outsourcing can translate into more time to focus on business operations. Nonetheless, some CFOs insist on doing the vast majority of their IR duties in-house and making only periodic use of outside help.

The trend towards outsourcing IR has only been spurred by legislation

such as the Sarbanes-Oxley Act of 2002. The legislation, which underscores the importance of accuracy in public disclosure and auditing practices, essentially requires a higher level of effort from IR departments.

In fact, the National Investor Relations Institute (NIRI)'s latest trends survey report, published in 2004, notes that the job responsibilities of IR departments continue to multiply, partly owing to increased reporting and disclosure requirements. The report--a followup study is slated for later next year--says that 66 percent of IR executives at NIRI member firms continue to report that their overall responsibilities are increasing. That was up from 59 percent the year before. Furthermore, IR officers (IROs) at mid- and small-cap firms report a somewhat heftier increase in job duties than do IROs at their large-cap brethren.

To be sure, increased reporting and disclosure requirements stemming from legislation have prompted plenty of companies to outsource IR. And, enterprises that have taken the...