Covid-19 seemed but a memory at the 17th edition of Private Equity International’s Investor Relations, Marketing & Communications Forum, held in New York this week. The event could not have come at a better time given the triple whammy of market volatility, tapped out LPs and intense competition for capital that private equity funds are facing. Here are some key takeaways.

Reality slowly dashing fundraising expectations

The days of rapid-fire fundraising are probably in the past for all but the very top managers as capital constraints see general partners get cut back or cut out of LPs’ deployment cycles. “Whoever thought it was going to be a 12-month fundraising is now preparing internally for 18 months or maybe 24,” said the head of investor relations at a large, London-headquartered manager.

It is taking time for people in the market to adjust to the new reality and the messaging around it, added the head of investor relations at a North American mid-market specialist. The positive tone of press releases announcing the close of funds often fails to reflect the difficulty of getting them raised. “I do think [reality] is going to catch up. People are going to temper their fund size expectations.”

Grace in defeat more important than ever

The fight for capital means that GPs will have to deal with being turned down, and the manner in which they do so will have long-term implications. According to one banking managing director and former head of private equity at a public pension fund, GPs have to separate the individual from the institution to make sure they don’t burn bridges.

“I’ve had experiences where a GP is incredibly frustrated, they feel they’ve wasted time and you can tell you’re never going to have a conversation again. That’s so short sighted… I almost look at this industry like professional sports; there’s a pool of talent that’s moving around teams.”

GP communication still has room for improvement

Some GPs are still failing to consult LPs about major events in the life of a fund or portfolio company. A director and portfolio manager at a large European allocator noted that it is still common to receive “three-liner” emails informing LPs of significant events, such as a GP selling a minority stake or carrying out a continuation fund deal. Too often, when the LP does learn, it is after the rest of the market.

“It’s fine that [a stake sale] is happening but we want the background, what led you to the decision, what is happening on the governance side, how will structures change, how will the investment committee change? Getting in front of that is very important.”

Performance? Forget about it

Is performance the be all and end all? Not when it comes to marketing a fund, said a managing director with a London-based fund services group. “We go to principals and say, ‘can any of you in the room guarantee performance?’ Normally people say they can’t. Is it smart to build messaging and communication around something you can’t guarantee?”

GPs should think of themselves more as brands and sell themselves based on a set of positive values, rather than filling pitch decks with data, they said: “I love [clothing retailer] Patagonia. I’ve never met Yvon Chouinard, who created Patagonia, but I have an inherent belief in that brand.”

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