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Moniker makeovers

GPs can grow out of a number of things, and names are no exception.

In recent years, a spate of private equity GPs has undergone the process of modifying their monikers, perhaps offering further evidence of the industry's rapid evolution. A private equity firm's name is an integral piece of its corporate identity, and occasionally sprucing up the name on the door can give a GP's image – and business – a boost.

While a number of GPs adopt new names out of necessity – such as in the case of merging with another firm or spinning out from a parent institution – there are many firms that have recently chosen to rebrand without being propelled by structural change of that level of magnitude.

A significant portion of renaming efforts hastaken place at private equity firms that originally took on their founders' surnames, particularly if the GP was established during the early days of private equity. With many founding partners transitioning into retirement as a new generation of leaders arises, the need to find a name that better reflects the GP's focus and ownership has become an issue for many firms.

Highlighted by many was the recent rebranding of Hicks Muse Tate & Furst, which now presents itself as HM Capital Partners. The switch was announced on March 1, 2006 – more than a year following the retirement of the Dallas, Texas-based buyout shop's co-founder Tom Hicks.

The announcement released by the firm quoted HM Capital chairman John Muse as attributing the change to the firm's desire to communicate its evolution and emergence of new leadership through the firm's branding. ?We have also chosen a new name that honors the past but points to the future – a name that will serve us well over the long term,? said Muse.

A similar scenario took place at the UK middle market firm Sovereign Capital, where the retirement of founder Andrew Sells in 2000 spurred a rebranding campaign for what was formerly known as Nash, Sells & Partners.

Other GPs have found that their name no longer fits with their focus, so they decide to adopt a new name that more accurately conveys their strategy to – and attracts the attention of – their universe of investors and investees.

For Brand Equity Ventures, which changed its name to BEV Capital in early 2002, ?The key rationale for the change was to signal to the world that we were not a fund that invested in only branded companies but our focus now also included technology applications,? says David Yarnell, a co-founder and managing general partner of the Stamford, Connecticut-based venture firm. When asked about the impact of the rebranding effort, Yarnell commented, ?We did not quantitatively track results, although it seems our deal flow continued at similar levels it was at. Our team, however, felt it was easier to pitch our technology knowledge under the BEV Capital banner than the Brand Equity Ventures banner.?

More recently, PPM Ventures – the Europe-based private equity arm of international financial services group Prudential plc – decided in May of last year to start calling itself ?PPM Capital.? The logic behind the change was that it would help circumvent the VC connotation that was associated with its former name, and that the rewording would better reflect PPM's focus on the upper echelons of the middle market.

Similarly, TVM announced earlier this year that it had appended the word ?Capital? to its name, with the ambition of enabling the firm to ?marry its brand heritage with its current position as a leading venture capital investor in innovative life sciences and technology companies in both the US and Europe,? according to a press release.

However, there are a number of firms that have been active in the private equity markets for decades – such as Kleiner Perkins, Kohlberg Kravis Roberts and TA Associates – and who haven't seen the need to change their names, despite the transitions in leadership and/or strategy that have taken place over the years.

In a similar vein, drastic or ill-timed identity makeovers just might be interpreted as a signal of a business in need of resuscitation – rather than a mere revitalization – by investors, portfolio companies, and the public at large. Therefore, a GP considering a change of name should be conscious of promoting the strategic angle to the change, while being careful not to convey a sense of making the change on a whim – or out of desperation.