Private Equity: Digital Reputation Management

Effective reputation management in the digital landscapePRIVATE EQUITY

N7 CONSULTING GROUPMonday, 9 September 13

•!Between 2004 to 2006, employment of PE increased to 1.2m (8% of private sector);•!The Financial Crisis in 2007 was a turning point for the PE industry:

- PE received a lot of negative attention due to the failure to explain what it does;- PE managers have given the industry the image of ‘job-destroying vultures’;- PE funds also received negative publicity of abusing tax loopholes.

Private Equity: Industry Overview

Monday, 9 September 13

Private Equity: Reputation Management Regulations

According to the regulations imposed by the BVCA, Private Equity Funds must:

•!Disclose their ownership structures, investment approaches and portfolio;

•!Regularly provide data to the BVCA and the EVCA;

•!Effectively communicate with employees in timely manner during periods of strategic change.

•!Disclose the financials and activities of portfolio companies, including: annual report, accounts, and a quarterly summary of the major developments.


Private Equity: Importance of Reputation

Stephen McGree, Execu(ve Director

‘’I shouldn’t have to spend so much (me ‘selling’ private equity to business owners. For certain companies, private equity is clearly

the best solution”.

Chris/ne Croissant, Managing Director

‘’Reputa(on helps see more transac(ons, win more deals, garner more investors, aCract and retain excellent employees,

and broaden its pool of partner lenders’’.

Mark Jones, Partner

‘’Firm’s reputa(on can be a key reason that a firm gets to see a deal in the first place,is

selected to come meet management, and is chosen by the seller’’.


Private Equity: Current Stance of Reputation

30%

48%

23%

Journalists Opinion

PoorFairGoodExcellent

Source: BackBay Communications, 2013

•!Journalists: No journalists believe that PE firms are excellent communicators; 23% believe their communication is poor;

•!Investors: The overall opinion PE firm is low compared with other industries. The key issue is the manger’s lack of integrity around the deal process.

Hellman & FriedmanAdvent International

Berkshire PartnersCVC

CarlyleApollo

EQTBlackstone

Bain CapitalBridgepoint

CinvenApaxTPG

PermiraKKR

3i

-50 -37.5 -25 -12.5 0 12.5 25 37.5

Investors Opinion

Source: Gracechurch Consulting, 2013


Reputation Management: Main Issues

In crisis situations, PE do not ready for dialog with customers and immediate reaction.

PE funds are unable to publish timely news on buyouts and exits.

Timeliness Transparency

PE funds do not clearly convey their fund’s approach, investment criteria, objectives etc.

Expertise

PE do not develop and publicize industry insights and trends regularly.

Team

PE funds do not show investors the integrity of the management team.

Crisis Readiness


Reputation Management: Role of Digital Media in PE funds

86%of investors

say

Online sources such as social networks and blogs have become more important since 2012.

24%of investors

use

Social media to engage with private equity funds.

30%of investors

have

Accounts on Twitter and 12% make investment decision after reading Twitter.

Company blogs regularly and 24% make investment after reading a blog.

30%of investors

have

52%of investors

read

-13%growth rate

The importance of news release for reputation has declined since 2011.

Golz J et al (2012)Monday, 9 September 13

Digital Reputation Benchmark


Benchmarking: PE Funds

The Digital Marketing Benchmark identifies the digital activities of the following 15 funds:


Benchmarking: Impact of channels on reputation

20%

25%27%

28%

Communications activity (28%): number and frequency of press releases, additional touchpoints and presence of media contacts;

Website (27%): presence of unique content, the level of transparency and multi-devices access;

Social Media Visibility (25%): number of SM profiles and audience size, frequency of content, engagement rate and coherence of communications;

Search (20%): correlation between search queries and SEO optimization.

The channels and activities in consideration are:

* Respective weights are achieved from the combined opinion of digital marketing and Private Equity Experts, 2013


Benchmarking: Results Brief

2.9/5 average score

The Private Equity industry on the whole scores only moderately in terms of digital reputation management.

The Blackstone Group is the leader in terms of digital reputation (DRS: 3.762), with the use of all social media such as Facebook, LinkedIn, Twitter and, in particular, Youtube. All content are consistent and relevant.

Most PE funds are currently utilising blogs, newsletters, reports and brochures to Engage with customers.However, funds often neglect to optimise their search activities, and do not use PPC.

*The full benchmarking report is confidential to my client and will not be freely available at this stage.


Strategy Recommendations


Digital Reputation Strategy

Branding Personal Relations

Consumer Education

"lear articulation of firm strategy, goals, positioning, investing approach, returns, team and investee portfolio.

Personal communication with key partners: LP, investment banks and advisors, lenders etc.

Demystify private equity via multimedia case studies and other educational content.


Channels and Tools

Social MediaWebsite and

Communication Activity

Search

•!Use website as the main touchpoint and provide transparent content;

•!Uphold strong communin. activities and optimise content for newsletters, RSS feeds and mobile devices.

•!Use a variety of different social media channels;

•!Consistent content on social media and website;

•!Use interactive content to engage and educate key target audiences.

•!Implement SEO by general industry and brand keywords to increase traffic;

•!Implement SEO by sectors’ keywords and use PPC to attract the attention of investors.

55% 25% 20%


•!Website: Use a variety of content to educate and promote transparency: case studies, educational content, press releases, brochures reports etc.;

•!Social Media: Content should be consistent with communication, but provides engaging experience: industry news, forecasts, and interviews with team members.

Content and Engagement


Thank You!


Private Equity: Digital Reputation Management

Economy & Finance

Transcript of Private Equity: Digital Reputation Management