Whether a company is just embarking on their journey into the capital markets for the first time with an initial public offering, or has been trading for decades, one of the most important decisions will be which broker-dealers they work with. A broker-dealer is a financial firm that both executes trades for clients (broker) and trades for its own account (dealer). For corporations, broker-dealers help by:
- Connecting companies with investors through institutional and retail channels.
- Providing research coverage to explain the company’s story to the market.
- Supporting liquidity by actively trading the company’s stock.
- Advising on capital markets transactions like offerings and M&A.
- Facilitating investor engagement via roadshows and meetings.
Companies must establish enduring relationships with those firms whose capabilities, sector focus, and size align with the company’s own. In short, companies should seek a marriage of equals when it comes to the sell-side.
1. Start with the Right Mindset
Like all relationships, the issuer and broker-dealer relationship is a two-way street of reciprocity and quid pro quo. Management teams should approach their relationship with the sell-side of the street with an open and positive mindset. Issuers that understand how a broker-dealer’s interests intersect with their own, and use that to their advantage, are likely to have the most success (and not just with the broker-dealer, but with the broader market). Management teams that view the sell-side with resentment and cynicism are bound to have poor sell-side relationships that ultimately strategically disadvantage them relative to their competitors.
Management and IR teams should move beyond the transactional and aim for transformational in their relationships with the sell-side. They should consistently engage and support the broker-dealer’s analyst, corporate access, sales desk, broker networks, and advisory services. Issuers should then reward those dealers – providing them with support and the opportunity to participate in offerings, M&A, non-deal roadshows and other paid advisory services.
2. Match size and sectoral expertise
Not all broker-dealers are created equal for every issuer. A critical starting point is recognising that your company’s size, risk profile, and stage will dictate the type of broker-dealer that can give you meaningful support.
Size matters: Boutique vs Global
For many small- to mid-cap companies, the best partner is likely a boutique broker-dealer that treats you as a priority. Given the importance of your business to the boutique dealer, they bring out their “A-team” for you. Larger global broker-dealers may have broader reach but will often allocate their senior resources to mega-cap clients. As your company grows, the marketplace and your syndicate selection should reflect that growth.
Fit Matters: Sectoral expertise
Selecting a firm that does not have resources that understand your industry or is ill-equipped to cover you, may consign your company to the sidelines of that broker-dealer’s resources. A good broker-dealer relationship will provide management with access to a sell-side analyst(s) that have specific focus, knowledge, and understanding of the company’s sector and operations. While this seems obvious, broker-dealers often court companies even when they do not have an analyst with the right expertise to analyze the company’s performance. This creates a challenge for companies when managing analysts from different backgrounds that do not understand the industry the company is operating in.
Key takeaway: Choose a broker-dealer whose size, expertise, resources, and regional operating model reflect your company’s current reality and ambitions.
3. Meaningful analyst coverage
Once you’ve narrowed the playing field by size and the potential fit of the research analyst, the next step is to build a durable relationship that eventually translates into high quality research.
Analyst fit (expanded)
As touched on above, a mismatch between a covering analyst’s expertise and the issuer’s sector creates risk. The analyst will likely become a source of inaccurate expectations in the market (either to the upside or downside). This won’t happen out of malicious intent or negligence. And it certainly isn’t a reflection of the analyst’s talent or intelligence. But when an analyst covering 20 companies in “Industry A” is asked to cover a company from “Industry Z”, they are being set up to fail. Pay attention to the analyst’s workload, background, coverage universe and credibility. Educational time spent with analysts is quite valuable in informing their opinions – look for analysts who are willing to take the time to understand your organization.
Coverage is not guaranteed
Issuers are not entitled to analyst coverage. Research coverage is expensive to launch and maintain, and is therefore a resource a broker-dealer allocates with care. If your company does not meet the internal thresholds of the broker-dealer (trading volume, capital markets activity, investor interest, sector resonance) you may receive minimal attention or be placed on the back-burner. One way to guarantee you won’t get coverage is to engage in non-brokered offerings.
Key takeaway: Don’t accept an analyst just for the sake of coverage. Insist that the analyst and their institution can bring genuine sector expertise and persuasive market access.
4. Assess relationship quality over the long-term
A successful relationship with a broker-dealer is more than just trading your stock or having an analyst report. There are five pillars of broker-dealer support: constructive research, effective institutional marketing, active trading (liquidity), access to the retail broker networks, and advisory services.
Constructive research
The analyst must undertake meaningful research that clarifies your business for the market. A “tick-the-box” coverage that merely publishes occasional notes without depth and insight adds little value – spend time educating the analyst.
Institutional marketing
Your broker-dealer should facilitate investor meetings, roadshows, and help target the right investor base. If the broker uses you only for generic events and does not tailor the outreach to your company’s size and investor profile, you may not get the benefit.
Active trading and liquidity
An issuer must avoid becoming an “illiquid” stock that institutions shy away from. A broker-dealer’s trading desk should actively engage with and understand your company’s story to support the market.
Retail network access
For many companies, retail investor channels are important. A broker with a strong retail network can amplify your visibility.
M&A deal flow and advisory
Broker-dealers are often the first to become aware of potentially accretive M&A deals. But who they prioritize for the deal makes a big difference to a company’s future potential.
Companies should measure outcomes and take corrective action if the broker isn’t delivering. For example, if the dealer isn’t trading the issuer, then management should present to the sales desk to achieve a larger share of mind when they are pitching and trading. If the broker’s coverage is unfairly negative, or does not reflect your business in a accurate manner, engage with the analyst on a more frequent basis, and determine how the analyst can be better supported through clearer reporting, additional metrics, etc.
Key takeaway: Evaluate the quality and depth of the broker-dealer’s support across the five pillars on an ongoing basis. But be sure your management and IR teams are doing everything they can to help the broker-dealer help you. This require proactive ongoing support.
5. Managing the evolution of broker-dealer relationships
As your business evolves, so should your broker-dealer syndicate. What worked when you were a $40 million market cap company will not be appropriate when you cross the $1 billion+ threshold. As the company grows it will face greater liquidity demands, broader analyst scrutiny and heightened investor expectations.
Going from Under-Brokered to Over-brokered
Most companies start out struggling to gain the street’s attention. After achieving some traction with the investment community, more broker-dealers will come knocking until, suddenly, there are too many mouths to feed.
When a company has many broker-dealers covering it but limited management bandwidth and limited room in offering syndicates, the company becomes “over-brokered”. MCI recommends prioritising broker-dealer relationships based on:
- Which brokers have delivered the strongest support over time including:
- Quality of research coverage
- Block trading activity (visible in Canada)
- Non-deal roadshow performance
- Broker network access and retail distribution capabilities (retail desk); and
- M&A deal flow and advisory
- Which are the best match in size, service and industry coverage; and
- Which are the most trusted.
Loyalty matters — but clarity is key
There is value in remaining loyal to the broker-dealers who supported you when you were smaller. They understand your story, your capital markets history, and have earned institutional trust. That said, companies should not become prisoners of legacy relationships if the broker-dealer is no longer delivering or cannot scale with the company.
Prioritise allocation of syndicate rights
When a company engages multiple broker-dealers, management and the capital markets team must constantly assess how syndicate roles, non-deal roadshows and event participation are allocated. If you favor a broker-dealer that is not performing, you may inadvertently deny access to stronger relationships. Companies can unintentionally shrink their access by how they allocate these opportunities.
Graceful exit strategy
A broker-dealer relationship may no longer be effective if the firm provides only superficial or infrequent research coverage, fails to tailor investor outreach, does not actively support trading liquidity, lacks strong retail distribution, or stops delivering meaningful advisory opportunities such as M&A deal flow. Other warning signs include too many brokers competing for limited management attention (over-brokered), legacy partners unable to scale with your growth, or declining performance across key pillars like research, marketing, liquidity, and strategic advice. Regular evaluation of these factors helps ensure the relationship remains aligned with your company’s size, sector, and objectives.
When a broker-dealer is no longer bringing value, the exit should be managed with professionalism and delicacy. Syndicate participation should be reduced over time, communication should remain respectful, and market perception should be considered. You do not want to burn any bridges. At the same time, you must be honest in evaluating performance and redirecting your budget of attention to those firms delivering results.
Key takeaway: Think of your broker-dealer relationships as dynamic. Over time you may need to rotate, elevate or transition partners to match your growth and strategy.
Conclusion
Selecting and managing your syndicate of broker-dealers should not be an after-thought. It is one of the most important sets of partnerships your company will form in the capital markets. The right relationships will bring focused analyst coverage, meaningful institutional marketing, active trading support and access to the retail network — all calibrated to your size, sector and strategy. The wrong relationships will leave you on the sidelines, under-resourced, and muted in the marketplace.
At MCI we believe companies that treat this selection process with discipline, measurement, and strategic clarity will build marriages of equals with their broker-dealers. These partnerships will serve as catalysts for investor engagement, liquidity, valuation and long-term success.
If you’d like to benchmark your current syndicate, assess prospective broker-dealer fit, or implement a performance review framework for your IR team, MCI’s Capital Markets Strategy and Market Connect services are here to help.