GP communications missing a trick

Emanuel Eftimiu
07 May 2010

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Many of Europeтs most prolific later stage investors have some way to go before they can consider themselves truly transparent, as Emanuel Eftimiu finds out.

Europe's private equity firms have set great store in achieving transparency, judging by the efforts they have made in recent years. Perhaps fairly criticised in the past for the secrecy with which they conducted their investment activities and their reticence to disclose information, industry bodies have worked hard to help their members satisfy the requests, and demands, of governments, regulators, the press and the wider business community.

But the defensive posture taken by the industry in the face of such widespread interest brings with it a risk: are GPs properly grasping the opportunities that this new, albeit enforced, openness affords them? Are they communicating because they want to or because they have to? And how easy is it for an interested party to find out what they want to know?

A recent study undertaken by IE Consulting researched the volume and type of content readily available on the websites of the 25 most active buyout and growth capital investors in Europe (January 2006 to March 2010 inclusive).

"The premise of the study was that the first port of call for any LP, journalist, business owner or intermediary with an interest in a particular GP would often be its website," comments Matthew Craig-Greene, managing principal at IE Consulting. "We expected to find that most GP websites would provide decent access to information. We were wrong."

The findings reveal that while every UK-headquartered GP provides at least some basic information on their funds and the breakdown of current investors, more than a third of their continental peers do not.

The accessibility of investment teams was also highlighted by the study. As one would expect, every GP clearly listed their investment executives, but as Craig-Greene notes, having declared them the GPs seemed to have gone to great pains to make these inaccessible.

"Surely, investors have communications teams for a reason: so that investment professionals can focus on finding and doing deals. But providing some way for interested MBI candidates or business owners to take up direct contact has to make sense. If a direct line (to a PA, perhaps) or even email is too invasive, then why not just provide a simple, individual contact form for each deal exec (as 3i does)?" poses Craig-Greene.

Two-thirds of UK GPs, almost twice the proportion of those in continental Europe, provided this level of accessibility.

Remarkably, though, the study found that many GPs don't even provide easy access to contact information for the dedicated external communications teams that service their firms. Given that leading GPs are bound to have appointed an external source to the business to execute a communications strategy (even if that strategy is managed in-house), the findings raises the question as to why GPs would want to protect themselves from inbound enquiries?

It is true that there is increasing regulatory pressure on GPs to comply with specific communications protocols, but does this excuse the fact that many are missing the competitive advantage that more wide-ranging, open and transparent communications activities could provide?

For more information about the study contact Matthew Craig-Greene at matthew.craig-greene@ieconsulting.co.uk