A recent PE Manager comment letter (“A brand like no other”) noted several strategies put forward by a panel of brand consultants for private equity firms to distinguish themselves from generic competitors. They noted GPs should be careful to brand the firm, not the rainmaker; avoid copying other firms’ branding strategies too closely; and consult outside stakeholders (i.e., placement agents, investors, bankers) to understand the firm’s current brand and build what you want to achieve from there. One industry public relations expert disagreed. We challenged him to explain what some branding experts are getting wrong.
ROSS BUTLER'S RESPONSE:
Don’t fixate on ‘differentiation’. Most presentations by private equity managers I have sat through try too hard to differentiate. The result is a focus on relatively minor structural or tactical points to the detriment of their overall offering. It’s an understandable temptation in a competitive market, but be careful what you wish for. Consider the term JAMMBO: it sounds pejorative but it actually signals something positive: the business model works. Mid-market private equity firms employ a powerful ownership structure proven over many cycles, spawning replication and interest from investors. So from what are you differentiating? Mostof the time, value is created not through inspiration but by the quality of execution. There is much to be said for proven and talented management teams operating in established markets.
Don’t try too hard to increase visibility with investors.The challenge for LPs is to identify those managers that employ the private equity model most skilfully. You won’t help them by manufacturing a dazzling and novel brand, but through the more nuanced affair of articulating your firm’s culture of operational excellence. Unlike shopping for breakfast cereal, those in the market for limited partnership participations go straight to the ingredients. Make sure your packaging facilitates this.
Similarly, don’t worry too much about creating ‘a more distinct logo’. Branded logos are essential when dealing with cattle and consumers. Private equity firms rarely deal with either. Chose a logo, stick with it, and get on with business.
‘Consult outside stakeholders’. If you need to do this, you have a confidence problem or a strategy deficiency. Nobody knows your business better than you. If you truly lack empathy, solicit feedback in a structured and on-going way through the normal course of business.
‘Brand the firm not the rainmaker.’ I agree to an extent – branding should transcend the individual – senior or otherwise. Concentrate on articulating a coherent and institutionalised company culture but don’t go too far: a strong brand need not efface individual personalities. When it comes to brands-as-titles, it’s old-fashioned to use the founders’ names. This is sometimes circumstantial and using contrivances or metaphor certainly side-steps internal politics. But the journey from impersonal-to-forgettable is a short one. Even an acronym of long-retired founders tends to feel more personal than a bastardized Greco-Latin fabrication (compare KKR or KPMG with Accenture or Cognetas). It is the company’s leaders that instil culture and it is culture that ensures continuity. Each situation is different, but be wary of branding gurus and their sanitized concoctions. If in doubt, keep it simple.
So how should you communicate in order to attract investors? A good start would be to forget the abstract concept of ‘branding’ and observe a few simple principles:
Put substance over form
How others see you stems from a confluence of factors but for private equity firms the most important are performance and culture. How you articulate these eclipses any other consideration.
Start by trying to make your marketing material expressive, rather than impressive. Check out Berkshire Hathaway’s website. I wouldn’t advocate its exercise in minimalism but in an age of affordable shiny websites, there is something heraldic in its ugliness. It shows great confidence in its fundamental proposition.
No lazy language or thinking
Do not use words unthinkingly, particularly jargon and marketing terms. It’s surprising how imprecise and unhelpful so-called technical language can be.
If you are a new manager or can’t demonstrate consistently good performance, at least show consistency of thinking and conviction in a clearly defined strategy, rooted in a healthy company culture.
As with most things, strong branding is achieved by quality execution, not flamboyant inspiration. Be honest and clear about what you do; a strong brand will flow from there.