Developing a strong private equity brand is essential for fundraising, deal sourcing and recruiting, and to succeed in today’s competitive marketplace, 42 percent of private equity firms are taking steps to increase their visibility—and 58 percent are increasing their marketing budgets. according to a new study by financial services communications agency BackBay Communications and capital markets financial data firm PitchBook.
According to the survey of 45 private equity firms, 70 percent of respondents say having a strong brand is very important, and 30 percent say it is somewhat important. Ninety-one percent say the need for a strong brand has increased over the last two years, driven by competition for deals (56 percent), an increase in the number of private equity firms (19 percent) and competition for fundraising (19 percent). The goals of increased brand building are generating awareness among CEOs and management teams (50 percent), limited partners (33 percent), and investment bankers (11 percent).
The firm attributes that contribute most to a strong brand are investment returns (79 percent), management team (63 percent) and clearly articulated firm positioning (53 percent), followed by content that demonstrates a firm’s expertise (47 percent) and firm culture (47 percent).
Marketing budgets on the rise
“There is consensus among private equity firms that building a strong brand is essential for deal sourcing, fundraising and recruiting, and it is encouraging to see private equity firms embrace the need for differentiated firm positioning and ongoing integrated communications programs that positions them as experts,” said Bill Haynes, president and CEO of BackBay Communications, in a news release.
“Just as there is competition for new deals and limited partner funding, there is competition for mindshare among limited partners, investment bankers, business brokers and management teams, and forward-thinking private equity firms are making a commitment to clearly convey the reasons investors, advisors and companies should work with them,” he added.
Brand building tips
Strong investment returns (79 percent), investment discipline (63 percent) and building a cohesive firm culture (58 percent) are the most effective means for private equity firms to build a strong brand. These attributes can be best leveraged through personal meetings (63 percent), conference speaking (58 percent) and marketing materials (47 percent), media interviews (32 percent), websites (37 percent) and white papers that demonstrate a firm’s expertise (37 percent).
In this competitive and dynamic market, 32 percent of private equity firm respondents have changed their strategy in the last year, 16 percent have experienced a crisis at their firm, and 21 percent have experienced a portfolio company crisis. Many private equity firms have experienced difficulty with their media relations efforts, with 21 percent failing to capitalize on their firm’s news, 16 percent experiencing incorrect or misleading media coverage, and 11% not answering media inquiries.
Handling media relations
“It is essential for private equity firms today to have a professional approach to media relations—whether residing in-house or outsourced to an agency—to manage and protect their reputations and that of their portfolio companies, as well as to capitalize on positive news and demonstrate their expertise,” said Haynes.
Nearly one third (32 percent) of private equity firms say social media is a necessary channel to distribute firm news and views. While 26 percent say they are considering using social media in the future, 26% don’t see social media as necessary for private equity.
“Private equity firm branding, marketing and public relations have become much more sophisticated over the last decade as private equity firms professionalize their operations,” said Garrett Black, manager of custom research at PitchBook, in the release. “With private equity firms of all sizes needing to compete for dollars and deals, and with more team members spinning off to start their own firms, clearly articulating a firm’s positioning and then raising awareness through complementary tools and tactics in on an ongoing campaign is more important than ever.”