Let’s be clear: an award will never make or break your business. But it does help a firm’s reputation and brand value. Law firms have historically been better at recognizing this. Unlike in private equity, where a few key investor relationships could often sustain a firm’s existence, law firms operate in a more fluid market and generally need a bigger client base to thrive.
This is why law firms make sure their halos are widely visible, and why they care about awards too. Many employ marketing staff to track the firm’s position in various rankings like the Legal 500 and regularly scan trade publications and other media titles for awards the firm can participate in. If nominated or lucky enough to win, you can generally expect an updated website and/or press release to follow trumpeting the success.
We’ve seen less of this in private funds management, but GPs are beginning to recognize the importance of brand value in a more crowded fundraising trail. Last week our sister titles Private Equity International, PERE, Infrastructure Investor and Private Debt Investor announced the winners of their annual awards – in which thousands of readers participated by voting online, making it truly an industry-wide effort – and soon after a percentage of the winners relayed the good news via press releases and social media. pfm would argue these firms are ahead of the curve. Whether it be an award or positive press coverage, it’s becoming more imperative to broadcast the firm’s wins and moments of third party recognition to a wider audience.
One of the primary reasons for this is the democratization of the industry’s investor base. Relaxed general solicitation rules in the US, and regulatory efforts in the EU to give GPs access to retail investors, will likely mean retail investors allocating a chunk of their nest egg to long-term private funds. Small-time investors new to private equity will likely respond to strong branding to find the right manager for them. We’re also witnessing an awakening on how performance is reported. LPs have heard enough about every GP being “top quartile” and so are beginning to demand a more objective benchmark to compare and contrast managers; but in the meantime may award points to firms recognized by independent parties or news outlets for good performance.
In the time ahead, expect more of your peers to follow this strategy. Marketing staff will be given broader mandates to identify brand-building opportunities, and some GPs will hire content curators and other support staff to keep the firm’s website and other external image carriers up to date. Obviously, though, they’ll need some investment achievements to work with.