Talking heads

When it comes to investing, the marketing function seems to fit well with investment vehicles geared toward the consumer masses, ie mutual funds. But with private equity's ongoing maturation, marketing and communications are increasingly becoming important parts of the administration of many firms today. The National Venture Capital Association, for instance, last year formed the MarcomGroup, a group of marketing and communications professionals working at or for venture capital firms (see story page 8). According to one private equity firm's marketing specialist,?in this industry, since marketing is still relatively young, I believe it's a competitive advantage to have a dedicated person in place.?

But setting up a fully-fledged marketing and communications team internally isn't as feasible as it sounds. Not only would a dedicated group incur greater labor costs, but it would also add layers of bureaucracy to firms that generally maintain staffs of 20 individuals or less (with the exception, of course, of a handful of biggies such as The Carlyle Group or The Blackstone Group).

As a result, some firms are opting instead to mesh the responsibilities of marketing and communications between an internal professional and an external public relations company kept on retainer.

Marcia O'Carroll, the vice president of marketing at Boston-based TA Associates, says that this type of setup allows her firm to pass off more tactical, nitty-gritty responsibilities to the outside PR firm, letting her focus more on TA's overall marketing strategy. She still oversees TA's entire PR program and talks to reporters on a regular basis, but the outside PR firm is considered an extension of the internal marketing department.

?[The PR firm] has experience working in the financial services industry and has many contacts that we don't,?O'Carroll points out. ?With them, we have a team making calls, following up with reporters and proactively contacting them with stories that might interest them. They have access to the reporters. I alone could not have all of those relationships.?

Obviously a PR firm can do more than just put together press releases announcing deals and promotions. O'Carroll says her PR group makes a great sounding board for her own communications ideas and initiatives. In addition, TA's PR company organizes media tours in certain parts of the country to familiarize journalists with the private equity firm, and it does media training for the senior investment professionals by putting them in front of a camera and teaching them how to work with the media, including fielding difficult questions. ?Some people think they already know how to speak to the media, but you want to make sure they articulate a clear and consistent message and portray the firm in the best possible light,?she adds.

Some firms are opting instead to mesh the responsibilities of marketing and communications between an internal professional and an external public relations company kept on retainer.

Some private equity firms have taken an opposite approach to the one employed by TA. New York-based Harvest Partners, for instance, only brought in a dedicated marketing professional just recently, having up until this point relied on the efforts of some of its partners and an outside PR firm to coordinate its communications.

?Our profile has grown as we have grown,? says Harvest's senior managing director Harvey Mallement.?We manage a billion dollars now as opposed to just a couple hundred million eight years ago. We have more deals and larger deals that are more interesting to the reading public? Since the investment people spend most of their time on the deal side, the softer side of publicity is not an agenda item for them. Having someone have primary responsibility over that allows them to give full attention to an important area.?

Mallement says Harvest still allows the external PR firm an open mandate to find opportunities to speak with the press. Emily Heimermann, Harvest's new marketing director, says the PR firm helps craft releases and ?get the word out to our important constituency.? For example, since Harvest has completed a number of consumer products deals in the last few years, Mallement says the firm wanted ?the market to know thatwe have another element in our strategy.?

However, having both the external PR firm and an internal marketing specialist makes the firm's marketing more responsive, Heimermann maintains. ?We can be both proactive and reactive. I go to conferences, have relationships with deal sources, make sure the Web site is updated and coordinate press releases with the PR firm. It's all about making sure our message is being communicated effectively.?

Most importantly, adding the internal professional to an external PR strategy, according to Mallement, demonstrates a greater commitment to the institutionalization of the private equity asset class as a whole. ?Working with somebody specific indicates our commitment to that function. ? We have a quality professional that gives our marketing polish.?