Maryam Meddin, managing director of corporate communications specialist Clarus, explains how best to do it
There is an inverse relationship between the success of private equity firms and their public image. As they have prospered, so the clamour of their critics has reached a deafening pitch.
It was always in the nature of the private equity business that neither the firms, nor their managers and investors sought a profile or public approval. Those days are over. We are in the Information Age. With daily internet blogs, media-proliferation, the public’s insatiable appetite for news and corporate governance, no business can afford to shun publicity. Where there is an information vacuum it will be filled – usually with misinformation.
So for private equity firms today, good financial return is not the only performance indicator. Positive perceptions of their businesses make a material difference. It’s more important than ever to influence perceptions, to promote and protect corporate image. Reputation is a valuable asset and requires management.
Walker Report – The Tipping Point
It’s a year since Sir David Walker published the Guidelines for Disclosure and Transparency in Private Equity, in response to concerns from the British Venture Capital Association (BVCA) about the ailing reputation of the private equity industry.
A media storm had erupted early in 2007 criticising the British buyout industry with headlines such as “Private equity faces backlash,” “the bare knuckle and ultra-secretive world of private equity”, and with the industry collectively described as “locusts”.
In practice only a small percentage of firms are recommended to comply with Walker: subscribing to greater transparency by producing an annual review and regularly updating websites. Nevertheless greater accountability and public dialogue is undoubtedly the way forward for all private equity firms. It is not just a matter of answering the critics and addressing the caricature of private equity investors as shadowy unscrupulous individuals. It is time for private equity to put across its side of the story and take control of its public image.
Walker provides the supreme marketing platform; the chance to construct a brand reality and a corporate narrative. By defining and defending a brand, an organisation can determine how it is perceived within and without.
In a niche industry that regards itself as having more than its share of star players, the marketing opportunities offered up to a private equity firm by the Walker initiative don’t just enable it to address the interests of potential stakeholders, but also to appeal to the calibre of people it wants in its team.
Those who oppose openness may ultimately put their commercial freedom at risk. Walker represents a tipping point. Either firms seize the chance to win the hearts and minds of their ‘communities’ and target audiences by embracing transparency – or face greater strictures and scrutiny from the financial authorities and the broader opinion-forming public.
Harsher economic conditions compound the need for action. When whole economies are in near free-fall, companies fail and people fear for their job security, then governments turn to regulation in a desperate attempt to control events. Private equity is a prime target for the regulators – just last month the European Parliament was once again considering calls for stricter rules to govern the industry.
Creating and managing the brand
A brand embodies the core values of a company, what it stands for; its proposition to its target audiences. In the case of a private equity firm these audiences include potential and existing investors and stakeholders, regulators, recruits, the media, financial analysts, the companies within its portfolio and their employees.
Its style of operation, the companies and projects it invests in and how those in turn are perceived in the marketplace – these all represent the private equity expertise behind them, in other words, the brand.
Communicating the brand
Integral to the management of a firm’s brand is clear and consistent communication. As well as a corporate identity – a symbol of all the ideas and values a firm wants to convey – the firm’s marketing activities as a whole (from its printed and digital collateral to its PR activities, media relations, lobbying, networking and particularly its language), have to be thoughtfully structured to represent the organisation sensitively and accurately.
With these foundations in place, a firm is well prepared to engage in activities enabling it to proactively project its desired profile. By way of example, organisations like BP deal publicly with their detractors. BP has met environmentalists head-on with its own high profile environmental strategy of ‘Beyond Petroleum’, or thinking outside the barrel. Such openness allows a balanced picture to be presented and there is no reason why private equity firms cannot follow suit.
Private equity has a potent story to tell. It is entrepreneurism writ large. The industry boasts many talented people. They make flagging companies more efficient, coax success out of failure, create jobs and seed long term investment in communities. At best, private equity generates wealth – indeed it offers one vital route out of recession. Here is good ammunition for a lively discourse with the industry’s adversaries and neigh-sayers.
Rolf Jensen in his work, ‘Dream Society: How the coming shift from information to imagination will transform your business’, states, “Leaders will have to become storytellers first and managers second in the new society.” An energetic telling of the tale of private equity will enable the industry to emerge from the current crisis far better understood. Private equity cannot seek anonymity, it must show its public face.