LPs starved of access to GP information

Investors say they cannot find useful information about private equity firms and their staff online, according to fresh research.

GPs are not creating a good enough online presence, according to a new study from UK-based marketing consultancy Pivot Partners.

The survey, which examined how more than 500 GPs and LPs in Europe and North America communicate, revealed that 80 percent of LPs say they can’t easily find relevant information about GPs and their team members online. In contrast, only six percent of GP respondents recognized this as a problem.

One of LPs’ main criticisms is that GPs only communicate with investors during the fundraising period and that there is a “lack of transparency when the LP has not yet committed”, according to the study.  

Items included on LPs’ “wish list” include a secure online portal on GPs’ websites, more contact with GPs outside of fundraising and the availability of more details on the performance of the portfolio, the study said. 

Less than half – 47 percent – of the 300 GP websites Pivot analyzed had a link to a dedicated LP reporting site. While some GPs have used social media to improve communications with LPs, 64 percent of GPs do not have a social media policy for staff, and the majority of those that do not – 66 percent – have no plans to introduce one, according to the study.

Finding either an email address or a direct line for an individual at a private equity or venture capital  firm is “very difficult”, the research also said. Less than half (46 percent) of all investment staff have contact information readily available while only 25 percent of investor relations staff do.

“Smart firms can avoid the school boy errors of their peers by clearly explaining their investment criteria and making sure that names and contact details for key staff are easy to find online,” said Pivot director Emma Payne. “LPs, management teams and the media wish that GPs would communicate with them better – those that do will see the benefits.”

The research also gives credence to the growing importance of social media sites for GPs. LinkedIn especially was cited as an important resource for LPs and business owners. Roughly four out of every five business owners in search of financing use LinkedIn to research private equity firms. Meanwhile 72 percent of LPs said they use the professional social networking site to screen GPs. Roughly one third of fund advisors say they didn’t realize this was happening.

Of the firms that stood out for having a solid social media practice, Blackstone was recognized for its 21,077 LinkedIn followers and Sequoia Capital for its 90,114 twitter followers.