Spurred by the resurgence of inflation and dramatic increase in interest rates, uncertainty has loomed large since investors turned their calendars to 2022. For the private equity industry, this has meant a slowdown in dealmaking, a more competitive fundraising environment, and continued scrutiny from the press. Naturally, these forces have also required firms to reflect on their external relations strategy and adjust tactics amid the uncertainty.
The nuances vary by firm, but the overall direction for private equity is clearer than ever: the industry is taking its communications game to the next level and recognizes the need to continue adapting to the changing landscape. Rather than simply trying to not fall too far behind, firms are thinking more deeply about how to use communications to advance their business.
The conversations held on stage and on the sidelines of PEI’s IR, Marketing, & Communications Forum held last week validated this consensus and showed how many firms are trying to advance their strategies, beyond just the basics.
In case you could not make it, here are 5 key takeaways:
- Brand equity can help on both offense and defense
Brand equity is the commercial edge provided by your firm’s reputation. It deepens stakeholder trust, helping the business withstand challenging times, and win when there is a competitive opportunity. Without brand equity, firms are far more vulnerable to external events and reputational challenges that can erode the bottom line
Improve brand equity by taking an overall more proactive and transparent approach to communications. Be assertive about the value your firm provides to LPs, management teams, and other stakeholders. Use owned content to show this value in action and how private equity improves outcomes for businesses and the customers and employees who rely on them. Help educate reporters on timely issues that will improve their coverage.
- Authenticity trumps differentiation
Often firms spend considerable time trying to find the precise language that will signal to LPs and management teams that they are different from their peers. Yet, given the inherent similarities among firms, this can be a difficult, if not impossible, task.
Instead, use communications to persuade stakeholders you are among the best in breed, opposed to one of a kind. Spend more time supporting your firm’s brand position with compelling proof points. Make sure your content ladders up to your overall messaging framework and proves out this reputational positioning. Showing depth and sophistication within your niche will resonate with LPs, management teams, and press.
- Don’t shy away from new social channels, show up where important conversations are taking place
For good reason, LinkedIn has become the default social media platform for firms expanding their communications efforts. It is a professionally minded community and can enable you to target key stakeholders. Yet, the communications landscape is ever changing.
Adopt an open mindset when considering social media, and first consider where important conversations are taking place that impact your firm, and then decide whether to join that platform. Too often, social media platforms are dismissed without considering this point more carefully.
- When change is the norm, agility will help you toe the line
Look no further than the recent regional banking crisis in the U.S. to see how quickly communications expectations can change. Given the velocity of the news cycle, firms must be agile with how they approach the press and digital communications. This also applies in both directions, when deciding to enter a conversation and when to scale back.
If running paid media campaigns, make sure your firm can quickly taper its efforts to avoid appearing tone deaf around sensitive moments. Establish a tight feedback loop so you can gauge how well your messages are working with stakeholders. And when crises arise, use a rapid response team to assess how your firm can use the moment to its advantage and provide color to the press.
- Knock down silos for the best results
While responsibilities for investor relations, marketing, and communications often fall to one person, bigger organizations have entire teams dedicated to each function. As separate groups, they can sometimes fall out of sync despite interacting with the same set of stakeholders.
Work closely with your counterparts to understand their current efforts, longer-term plan, and how each function fits within the overall external relations strategy. PR efforts can help IR professionals court LPs and work in tandem with Marketing teams targeting portfolio companies. Take regular time to align efforts and find synergies.
As the private equity industry looks ahead to the coming months, the uncertainty that has characterized the past year and a half seems set to persist. Firms that continue to adapt and embrace a proactive approach to communications will be better positioned to capture opportunity when it arises and buttress the business in a challenging environment.
Tim Quinn, Executive Vice President in Edelman Smithfield’s Financial Services Practice.