Brand strength increasingly important for PE firms

Private equity professionals say that the need for a strong brand has increased amid growing competition in the industry according to a new joint study by SuperReturn, a private equity conference series, and BackBay Communications, a public relations, marketing and branding consultancy that specialises in working with private markets firms. The study, which surveyed general partners, limited partners, fund-of-funds, consultants and other private markets professionals across 27 firms globally on their attitudes and approaches to branding, reveals that 82% of respondents view private equity firms having a strong brand as ‘very important' with the remainder saying it is ‘somewhat important'. Generating awareness among CEOs and management teams for deal sourcing purposes was identified as the most common reason for needing a strong brand – cited by two-thirds (67%) of respondents – followed by the need to raise awareness among LPs and placement agents for fundraising (59%) and generating awareness among intermediaries, such as investment banks, for deal sourcing (56%). The overwhelming majority (86%) said that the need for a strong brand has only intensified over last two years, driven by increasing competition for deals (56%), an increase in the number of private equity firms in the market (41%) and competition for LP funds (41%).

One factor that looks set to become a more important focus for firms in the coming years is the expansion of the asset class to new pools of investors, particularly individual investors that have not historically had access to private capital and where awareness is very low. The RIA community was cited as one target group where having a strong brand is becoming increasingly important. Despite the recognised importance of brand, nearly half (47%) of the private equity firms surveyed described their brand awareness as ‘fairly weak' or ‘not very strong', with just 13% describing it as ‘very strong'. It is no surprise then that the majority (67%) are planning to increase their investments in marketing and communications with e-mail communications, thought leadership content, conference speaking, case studies, social media and media relations all set to be primary areas of focus. Advertising, sponsored content and podcasts were identified as a lower priority with few respondents looking to increase activity in these areas.