In private equity, the investor relations toolbox is much more limited than in the public company arena. Without quarterly conference calls, earnings announcements, investor inquiries driven by stock fluctuations, and traditional investor conferences, private equity investors rely much more heavily on a limited number of communications tools available to them. One of the most important of these tools is the annual LP meeting.
It is critical to make the LP meeting potent and informative. LP meetings, and the presentations they contain, allow GPs to communicate with their most important audience in an efficient and cost effective way. The annual LP meeting provides an important platform for validating investors’ decisions to commit to the current fund. More importantly, it serves as an unofficial, yet vitally important, catalyst in the inevitable march to the firm’s successor fund. The LP meeting also provides the opportunity to underscore, in a sophisticated way, a firm’s strategy, institutional values, and investment philosophy. For senior management, it is a chance to build or reinforce relationships with key investors, current and potential.
Out of all the communications activities that a firm conducts throughout the year, there is nothing that delivers a more succinct and all-encompassing articulation of a firm’s differentiating and competitive characteristics to a more concentrated and vital audience.
In this article, we hope to share some of the knowledge we have collected over the years in advising private equity firms and other alternative assets managers on the strategy and implementations of their investor relations events. Over the years, we have learned that successful annual meetings come in many forms – what is good for one firm is not necessarily good for another. Nevertheless, we have identified certain basic guidelines that, when applied with skill and expertise, will enhance most LP meetings.
The basics
The fundamentals can make or break a production. You can prepare the most interesting PowerPoint possible and have it delivered by your most dynamic speaker, but if the audience is uncomfortable, tired, bored or burnt out, it will not resonate with them.
• Locations and Timing: In terms of location, there are two factors to consider: convenience and sex appeal. Your options quite simply are a financial center, usually convenient for you and many of the LPs, or a location that is a draw in itself – a resort, for example. In terms of timing, shoot for convenience. Give preference to a Thursday and Friday combination – Monday and Tuesday combos are least popular.
• Pacing: To keep the audience interested, it is important not to string 3-4 hours of similar presentations back-to-back. Most LP meetings take a day but that day is best when stretched over two days. Have registration start late afternoon and put on a banquet that evening –a well known or provocative guest speaker will improve draw. Start early the following day and stay on schedule through lunch, with coffee breaks every 1.5 to 2 hours. After lunch, timing is more flexible, but be sure to leave time that afternoon for a rush to the airport.
• Sound: Although a lot of fuss is made about PowerPoint, at the end of the day sound is the most important presentation medium.
If the audience can’t hear, you’ve lost them. There are a variety of microphone options — wired podium mics, clip-mounted lavaliere mics, wireless handheld mics – not to mention complex mixing and projection options, so we recommend hiring a professional to run the sound for your meeting. It’s crucial to assign someone to be the producer of the event and get them started early. Particularly in financial centers like New York and London, the best venues fill up many months in advance, and you will have more strategic things to think about than logistics.
Delivery
There are two main ways of presenting – from behind a podium, or lectern, or in front of it. Most senior executives prefer to speak from behind a podium as it provides a place for a speech or notes and that obligatory bottle of water, but there is no doubt that speaking to an audience directly from the stage has the potential to be more effective. It allows the speaker to get closer to the audience in more ways than one. Podiums add formality – just think Hilary Clinton and Barack Obama debating on CNN behind podiums vs. striding a stage at a town hall meeting.
Prompting also takes several forms. The simplest version is a personal monitor for the speaker displaying the slide currently on screen. There is nothing worse than watching a speaker read slides with his or her back to the audience! Teleprompters or Autocues are also used by many companies, as they can give the impression of eye contact and eliminate a need for paper notes, which are particularly inelegant in podium-free speeches.
Most senior partners are at least decent speakers, but it is still very stressful and confidence is vital. Body language and the way the executives react to each other are all part of the impression the audience takes away. There is no right or wrong way, but these decisions on delivery must be based on a speaker’s comfort level.
Stagecraft
Presenting is storytelling. Presenting is showmanship. It’s not just substance – style matters. A collection of facts and charts that you have spent hours, perhaps days or weeks, analyzing, cannot be digested by an audience in 20 min, and they certainly will not come to the same conclusion that you did. Humans are programmed to respond to anecdotes, not data. That is why more often you will hear politicians tell stories about the working families they have helped than about how they have decreased unemployment by x percent. Private equity is no different. The percent of EBITDA growth is an important statistic, but more compelling is the story about how you identified a specific issue, worked through it with the portfolio company, and how that contributed to the bottom line. Stories provide an emotional context for facts, and they certainly make them more memorable.
There should be a beginning. What is the problem or what ground do you intend to cover? The presentation should build to a culmination point. The human memory is not particularly robust when it comes to recalling once-viewed presentations, so this is the one slide that your audience will remember if nothing else. Finally, do not forget to tie everything together with a clear conclusion or a call to action.
Keep it simple
Too often clarity of thought is sacrificed in favor of demonstrating the amount of work that has been done. Your slides are not what you have to say – they are there to support it. Thoughtful visuals can help make a good presentation great, but the star of the show is always the speaker, not the PowerPoint slides. People are much more interesting to the audience than the slide screen.
Keep your slides brief – the best visuals communicate just the main points, and avoid complete sentences, business-speak, and an overwhelming number of bullets points per slide. Leave the detail to the speaker.
Draft your presentation at least a month in advance, and include everything – every chart, every fact (and use placeholders to avoid unnecessary research). Gradually pare this down, reducing complexity to core messages, until you have the absolute minimum to tell your story. A few key facts – facts that no one else knows – will strengthen your case. Too many facts will confuse it.
Know your audience
A presentation is not a one-way street; you want your audience as engaged as possible, so be sure that you speak to the audience you have, not the one you wish you had. Remember that the audience has one thing on their mind – “are these guys going to make money for me?” Reading an audience is tough, but try to gage their mood and adapt the presentation to fit. For example – if they are restless after a long day of meetings, tell them that you recognize that they are tired and that you’ll keep it short.
One purpose of the meeting it to create a forum for senior management to bond with LPs, so treat presentations like a conversation, as opposed to a lecture. And just like as if you were meeting with an LP one-on-one, you should know as much about them as possible before the meeting. How many of them participated in which funds? Have a number of them expressed concerns about a particular investment or topic? Is there an LP that is likely to ask difficult questions during a Q&A session?
Bringing it all together
Some would say that it is possible to over-rehearse. We can tell you from experience that this is far better than under-rehearsing. The more you present the better you get. The earlier the actual presenter gets involved in the development of the presentation, the better it will turn out. Ask for help. There are skilled professionals who have made careers out of preparing executives for presentations. Whether it is graphical support, logistical expertise, or a pair of eyes and ears that know what to look and listen for, there are people that can take a series of presentations to the next level, whatever your budget. In fact, working with experts will wind up saving money. The time and effort that you save, not to mention the reduction in risk that something will go wrong, make all that prep time worthwhile. After all, you have to wait a whole year to improve your performance.
Rod Morrison also contributed to this article
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