The rise of the communicators

Many in the private equity market have been caught off guard lately by the many pitfalls and imperatives tied to their communications strategies. A function of the firm that was once an afterthought is now front of mind, as you'll read in this issue of PEI.

While those in the IR and/or communications role have in more robust times had to sometimes justify their existence, those days have passed for good. In fact, the GP franchise itself now must clearly explain to its LPs why it deserves to exist. That job falls to the professional communicators and network-builders. They are now bona fide rainmakers within the firm. Let's pause and reflect on the mission-critical tasks that lay before those charged with communicating with investors and the broader world:

  • • Relating in minute detail what the portfolio is worth, and why
  • • Delicately determining if LPs have the capital they originally committed to invest
  • • Boldly expanding the investor base beyond the existing LPs, regardless of how “prestigious” this group is perceived to be
  • • Joining with other GPs in advocating sound regulatory and tax policies
  • • Making sure the market knows that the firm is still “in business”
  • • Staying ahead of press reports that might inaccurately categorise the firm's health
  • Private equity will eventually emerge from the recessionary slump in which it now finds itself, but it will emerge a changed market. Fundraising will be more challenging, due diligence will be more invasive, reporting will be more exhaustive, brand-building will take place in a more Darwinian environment, the press will be even less polite, regulators will require reams of disclosures.

    Firms that wish to thrive in this new environment will need to have the right infrastructure and people in place. This includes having a robust investor relations and communications team. The time to bolster this business function is now. Just as investments made in scary vintage years bear the biggest fruit, investments in your firm during down times will be of critical value when the markets again return to health.

    Enjoy the issue,

    By David