The longevity of any private equity firm depends on its ability to raise capital for investment. This depends first and foremost on the manager's track record as an investor. Ceteris paribus, if the track record is good and the people who achieved it are still with the firm, a positive funding decision is likely. If past performance is less than impressive, support for the new fund may prove elusive. It almost is as simple as that.
I say ?almost?, because other, softer issues play a crucial role as well. The investors in the fund are the manager's clients ? and they want to be serviced well. They want to be kept abreast of ongoing developments in the fund. They want their performance updates to arrive on time. More importantly still, because they've agreed to enter into a ten- or twelve-year deal with the manager, they expect to be treated as genuine partners in the venture. And this is why investor relations is such a hot topic in the marketplace today.
Most private equity firms now recognize that to have a best-in-class investor relations function is to have an important advantage in competing for LP attention. This is why many senior IR professionals nowadays have partner status at the firms they represent. It is also why firms are spending ever-larger chunks of the management fee on making sure that communication processes, reporting technology and the annual LP meeting are handled as professionally as possible.
We at PEI Manager have written about innovation in private equity IR for many years. The issue before you is our most recent study of the topic, with associate editors Wanching Leong and Rob Kotecki delivering in-depth analysis of the people, the technology, the rules and regulations that shape the relationships between private equity fund managers, their clients and the intermediaries that go between them.
The customer is always king, says an ancient rule of markets. The proprietors of even the most in-demand private equity funds will do well not to forget it. That's what good IR is all about.
Enjoy the issue,
By David SnowDavid.firstname.lastname@example.org