In the dark ages of the industry, say, ten years ago, many deal partners played the part of the in-house chief information officer or investor relations expert, in addition to their deal duties. Nowadays, there are so many in-house CIOs and IR specialists on both sides of the Atlantic in the that they could form their own club, which, in fact, they recently did.
However, sheer numbers weren't the sole rationale for the founding of these new trade associations. Providing technology and/or IR counsel to private equity firms has evolved into its own distinct craft, each with its own challenges beyond the traditional corporate versions of these roles.
In the UK, the Private Equity Investor Relations Association (PEIRA) begins operating this summer, and will attempt to organize investor relations, client relations and marketing executives at private equity and venture capital firms into a single trade body. The group will undertake research, publish information, and provide education and training to the IR community within the private equity space.
The British Venture Capital Association is supporting the endeavor, with its own IR committee lending its expertise and experience to the project. In fact, Vince O'Brien, director of Montagu Capital and a former chairman of BVCA himself, is actively supporting the project as well, along with Thomas Kubr, managing director and CEO of Capital Dynamics, and the Equus Group, a private equity communications consultancy.
The group says its chief aim is to raise awareness of issues concerning private equity IR, representing the views of its members to the regulatory bodies, the investment community and policymakers. In the release announcing its launch, the group frequently cited the increased scrutiny of the asset class as the chief rationale for the project.
?At a time when private equity is finding itself under the media and political spotlight, PEIRA has been formed to provide training and promote best practice communications in the industry,? says Kate Goodall, a founding member and head of client relations at Capital Dynamics. The spotlight is illuminating key regulatory or tax advantages the industry enjoys, and causing plenty of politicos on both sides of the Atlantic to debate what, if any, of those advantages should remain. Against that backdrop, communication executives are no doubt keen to swap best practices and pool their resources to defend their industry.
While chief information officers at private equity firms might not face a Congressional hearing anytime soon, they too have been inspired to launch their own trade association. Their group, founded by Madison Dearborn Partners' CIO James Kouris, is designed to bring together high-level IT decision makers within the private equity industry so they can network, collectively stay abreast of advances and opportunities in buying products and services, and commiserate on the most outrageous requests from partners.
The trade group will be known as the Private Equity CIO Association and will address those aspects of the CIO role unique to those working in the asset class. Kouris points out that CIOs like himself specialize in acquisitions, in integrating new companies into a firm's portfolios. Traditional CIOs in private or public companies review a given product or service according to its utility to their own organization alone. Private equity CIOs have to keep in mind a technology has to work across the entire portfolio, which may span multiple industries.
Given the nature of deal making, many of the CIOs working in the space know each other already. Kouris and his peers phone each other frequently to discuss sales opportunities or synergies among the technologies their portfolio companies currently employ. Some Silicon Valley firms have already discovered the leverage these CIOs can offer. For example, one tech vendor called Kouris to explain a new router to him, and inquired how he might sell the equipment to all of the firm's portfolio companies.
With more tech vendors appreciating the one-stop selling factor of these CIOs, the group appears more frequently as an audience for vendor pitches. A trade group of CIOs could easily court multiple vendors to present their latest advance at one of their events, allowing the in-house tech gurus to receive updates on cutting edge offerings in a single sitting.
Much like the PEIRA, there's a compelling economic rationale for CIOs to launch their own group. The chance for efficient tech briefings that pave the way for purchasing discounts is hard to resist. But beyond buying power or staving off unwanted oversight, both CIOs and IR pros are grappling with a maturing industry, more complex and more competitive than ever before. It's easy to overlook the most fundamental reason for a trade association ? good old fashioned camaraderie among professionals that now speak their own language.