PEI: Why do PE firms need to worry about branding?
EA: Like every business, PE firms are facing an increasingly competitive, dynamic marketplace. In recent years, for example, competitive pressures have been aggravated by a growing perception of private equity as a financial engineering business, rather than one concerned with adding real value to companies specifically and the economy in general. To counteract this largely negative point of view, and establish unique ground in the competitive PE arena, you have to establish and nurture a brand. A brand gives you the toolbox – a way of communicating that, if done correctly, will mark your firm out as truly distinctive, truly positive and truly interesting.
How has the industry’s attitude to this area developed in the last decade?
Over the past ten years, there has been a growing realisation that PE firms can hold a conversation about their activities through similar media channels to every other product or service. The web has created many opportunities, the most obvious one being the use of a website to showcase a firm’s resources and business. The growth and increasing sophistication in B2B communication has empowered PE firms to start using the tools and strategies that, typically, many of their portfolio companies have embraced with powerful results for many years. But in order to hold an effective and consistent conversation, you need to define your brand.
What are the most important elements for firms to think about in that regard?
The key to a truly distinctive brand lies not so much in what you do, but how you do it. It’s the emotional rather than the functional brand drivers that make a firm truly distinctive in an ever-growing marketplace. In defining a brand you have to, first and foremost, put yourself firmly in your target’s shoes – whether they be an LP, management team or referrer. Then ask: ‘What kind of firm would I believe, trust and enjoy working with?’ Belief, trust and understanding are often the key ingredients to creating and sustaining relationships. And it is relationships that build brands.
Do different firms actually have clearly distinct identities, or are they much of a muchness?
Compare firms on functional criteria and they do tend to look the same. Introduce the emotional dimension (how you do it) to the equation and you start to see a much more interesting landscape; you start to discover what makes firms distinctive, relevant and welcome to you, what makes certain firms special. Every firm is distinctive in several ways. Those ways need to be rendered and articulated in an original way. And that’s the job of the brand.
What tend to be the most difficult bits of the actual branding process?
Branding should be a voyage of discovery. Under the guidance of the right brand development agency (one with both creativity and a detailed knowledge of the PE industry) it should provide a process that is both enjoyable and productive. It should generate ideas and strategies that involve and motivate, both internally and externally. All members of the firm should feel invested in the process, comfortable and perhaps a little challenged by the outcome. Inevitably there is debate, but the ambition is to build to consensus at the earliest opportunity, uniting the firm in creating a brand that acts as the central core in everything from marketing communications to investor relations activity. ?