6 11 pe brands d haarmeyer
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Focus Group: Top 30 PE Firms Selected From PEI 300 –Ranking By Capital Raised Over Last Five Years (April 2010)
1. The Carlyle Group $48b2. KKR $47b3. TPG $45b4. Apollo Global Mgmt $35b5. CVC Capital Partners $34b6. The Blackstone Group $31b7. Bain Capital $29b8. Warburg Pincus $22b9. Apax Partners $22b10.First Reserve Corp. $19b11.Advent International $18b12.Hellman & Friedman $17b13.Cerberus Capital Mgmt $15b14.General Atlantic $15b15.Permira $13b
16.Providence Equity Partners $12b17.Clayton Dubilier & Rice $12b18.Terra Firma Capital Partners $12b19.Bridgepoint $11b20.Teachers’ Private Capital $11b21.Charterhouse Capital Partners $11b22.Fortress Investment Group $11b23.Madison Dearborn Partners $11b24.Oaktree Capital Mgmt $11b25.TA Associates $11b26.Thomas H. Lee Partners $10b27.Cinven $10b28.Silver Lake $9b29.BC Partners $9b30.Nordic Capital $8b
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What Do PE Websites Say About Their Brands?
• There is a wide range in the type and amount of descriptive detail offered across top PE firm websites, but over 80% include information on:
– Investment strategy (97%) and investments (87%)– Team (90%)– Regional focus (80%)
• Less than 60% either define a unique value creation strategy or go into detail to explain their strategy (e.g., less than 30% include case studies)
• One third have a tagline or descriptive phase that differentiates their investment strategy or focus– “Deep industry experience, globally applied” – Carlyle– “Sector focus, local presence, global reach” – Apax Partners– “Building businesses, building value” – CDR
• Only 10% mention financial performance
• Less than 30% use social media (blogs, videos, or articles) though 40% include annual reports
• Bottom line: top PE firms as a group tend to focus their messaging (branding elements) around investments, strategy, and team indicating an opportunity for more differentiation on themes that may appeal to particular constituents (e.g., co-investment, ESG, firm values)
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Top 30 PE Firms: Summarized Website Content
0 20 40 60 80 100 120
ReturnsSocial Media/Videos
GP/Firm ValuesArticles/New sletters
Case StudiesOperating Partners
TaglineAnnual Report
Investor CompositionESG/Community
Value Add/Value CreationLP Login
Industry FocusRegional Focus
New sInvestments
TeamInvestment Strategy
Percent
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Background: Why Brands Matter
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The Value of a Strong, Trusted Brand
• A brand is a credible signal about the quality of a firm’s reputation earned over time
• Key assessors of a PE firm’s brand equity:– Investors– Prospective target company management– Debt market participants– Prospective employees– Regulators, media, and public
• A strong, trusted brand can provide quality assurance, hence command a premium, and be a source of competitive advantage
• Brand building and maintenance is about providing clear, consistent and compelling messaging around what differentiates a firm from its competition
• Key elements that firm’s use to distinguish themselves include:– Performance track record– Management team – continuity, breadth and depth– Distinct value creation capabilities and proprietary investment thesis– Co-investment commitment
• A brand can be denoted by company name, logo, tagline or some combination
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Anatomy of a PE Brand: Five Key Constituencies
BrandConveys expectation ofwhat firm will deliver
Reputationsum of how allconstituencies
view organization
Investors• Funding source• Change – becoming more selective of GPs, more
demanding of information and terms, and morepowerful
Prospective Portfolio Co. Mgmt.• Critical to deal flow • Change – greater competition for
managers’ allegiance
Debt Providers• Critical for deal making and generating
attractive returns• Change – After credit crisis, banking
reforms, more discerning
Regulators, Media, Public• Generally skeptical, not knowledgeable of PE• Change – Increasing PE activity could
amplify this bias; SEC registration willrequire increased transparency
Prospective Employees• Key resource for building teams• Change – Growth of PE business putspremium on top talent
Reputation is strengthenwhen the Brand PromiseIs met over time
Organizations with solid reputations are likely to have stronger and more stable returns, an easier time hiring and retaining the best recruits, and a greater likelihood of enduring the challenges of a crisis. Reputation Institute
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As Environment Changes, So Do the Values and Expectations of Key Constituents
Mission
Strategy
LeadershipTeamResourcesValues
+ PerformanceTrack Record
Brand Elements
“Great Recession”
Responsible Investing
Media Scrutiny and Bad Press
LP Negotiating Power
Growing Competition
Changing Environment
Greater Regulation
Key Constituents
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Brand Elements, Builders and Amplifiers
Mission
Strategy
LeadershipTeamResourcesValues
+ PerformanceTrack Record
Brand Elements
Media – e.g., TPG and KKR BusinessWeek stories
PPM / Presentations
Thought Leadership and Annual Reports
Website
• Is there Consistency of Tone, Message andAppearance?
• Is there a Guardian of the Brand”• Is the brand identity consistent across constituents?
“We treat our site as probably the most Important tool we have” Riverside Co.
Central Repository of brand and message
Brand Builders & Amplifiers
IR – All Investor Touch Points
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Taking the Message to the Media
Investors "are much more interested today in how you're going to deliver that value you're promising, They say, 'Give me examples.'“
TPG Co-Founder Jim Coulter
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Billion Dollar Brands
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"We can afford to lose money. We can afford to lose a lot of money. But we cannot afford to lose one shred of our reputation. Make sure everything you do can be reported on the front page of your local newspaper written by an unfriendly, but intelligent reporter.”
Warren Buffett, Berkshire Hathaway, Dec. 2002
“A brand creates a differential between firms. Out of two firms with equal performance, one will fare better in the minds of investors if it has a better brand.”
Sir Ronald Cohen, Co-founder of Apax Partners, 2009
Investors "are much more interested today in how you're going to deliver that value you're promising. . .They say, give me examples. . . It's time for us to enter the narrative.”
James Coulter, co-founder of TPG, Feb 17, 2011
“Without market beta in the form of strong GDP growth, expanding multiples and abundant leverage to drive returns, both GPs and LPs recognize that only the alpha that PE firms can provide through proprietary investment theses, enhanced due diligence and post-acquisition value-creation skills will lead their portfolio to outperform.
Bain & Co., Global Private Equity Report 2011
“By sharing information, meeting with the media, answering the critics and explaining our business, we’ve changed our brand.”
Christopher Ullman, Carlyle Group, 2011
“Our assets are our people, capital and reputation. If any of these are ever diminished, the last is the most difficult to restore.”
Goldman Sachs Business Principles
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Biographical Information
David Haarmeyer is a strategic communications, marketing, and economics professional with over 15 years of experience in consulting, start up and nonprofit environments. He has worked as a consultant for Cambridge Energy Research Associates, Global Environment Fund, the World Bank, the Federal Trade Commission, among others.
Mr. Haarmeyer has strong technical communication, organizational, and branding skills; and is a published writer in major business and finance publications including Journal of Applied Corporate Finance, Institutional Investor, Financial Times, and Wall Street Journal. He has a special expertise in breaking down and communicating complex economic ideas for strategy and sales/marketing.
Selected publications and presentations include:
• “Africa: Next Global Growth Engine?” Institutional Investor (online magazine), September 2009. • “Private Equity Benefit: Accountability,” American Banker (Viewpoint), August 7, 2009. • “Private Equity: Capitalism’s Misunderstood Entrepreneurs and Catalysts for Value Creation,” The
Independent Review: A Journal of Political Economy, Fall 2008, pp. 245-288. • “Active Investors and Ideology: Private Equity and it’s Discontents,” Presentation at the Association
of Private Enterprise Education Annual Meetings, Las Vegas, April 7, 2008.• "The Revolution in Active Investing: Creating Wealth and Better Governance," Journal of Applied
Corporate Finance, Morgan Stanley Publication, Spring 2007.