Home > Communications and marketing, Europe, Investor Relations, Private Equity and VC, Research and surveys > How transparent are private equity fund managers really? What do you think?

How transparent are private equity fund managers really? What do you think?

[tweetmeme source=”mattcg” service=”bit.ly” only_single=”false”]Private equity fund managers have been under pressure in recent years to improve both the reporting they undertake to their institutional investors and the transparency with which they operate, in general. Government, regulators, the press, Limited Partners: they all want to know more about the activites of GPs. My colleagues and I at IE Consulting have spent some time looking at the press releases of the most active General Partners in Europe.

We looked at:

  • The access provided to dealmakers and communications staff through their websites
  • The thematic content of all press releases issued since January 2006
  • The quantitative and qualitative content of all press releases pertaining to buyout investments issued in the last 12 months
  • Some of the results were surprising, some disappointing, some encouraging, and some downright astonishing.

    The results will be published in Private Equity Europe and the first installment is out at the end of this week.

    Of course, I’ll be uploading the information here, too!

    In the meantime, I’m interested in your thoughts:

    Should private equity firms be more transparent?
    If so, are they trying hard enough?
    And how successful are they being?

    Perhaps you work at a GP in a marketing or communications or PR role or you are a journalist, regulator or LP. Either way, I am sure you have some interesting thoughts on this. Let me know in the comments!

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  1. April 21, 2010 at 12:34 pm

    Most private equity firms provide their LP’s with as much or as little information as they want on the activities of the fund and the GP. The LP’s capital is the life blood of the firm so you try to keep the LPs very happy through solid returns and great communication. Investor relations is an important function at most private equity firms. Releasing public information is a different story. Private equity firms are “private” and keep information close to them for many reasons. One reason is that the information is proprietary and you don’t want to publish information that (1) other private equity firms might use to compete against you and (2) provide competitors of your portfolio companies information that can be used against them.

    Lastly, private equity does have a PR problem. The industry is viewed as a bunch of rich people that buy companies, lay off or cut the salaries of workers, close facilities, cut employee benefits and then “flip” the company for a quick profit. Does this occur? Sure. Is it the standard? Absolutely not. Private equity firms, more times than not, are portrayed as villains in the press. So the industry has become reluctant to make public information which is then used as a brick bat against the industry. If you go to shake someone’s hand and you wind up being punched in the nose you are going to stop shaking hands (OK, sometimes the punch in the nose is warranted). As a journalist covering the industry and as a 15-year veteran of the industry I know that private equity deserves better.

  2. April 21, 2010 at 12:47 pm

    Thanks for your comment, John. I agree with what you have said. There is a certain, understandable reluctance to release any more information than strictly necessary when it comes to reporting a deal. But herein lies the problem: I feel that private equity firms can find themselves so preoccupied with the “defensive” mindset, when it comes to communicating with the market, that they entirely miss the OPPORTUNITIES that strong communication and, perhaps, a little more transparency can afford. OK, so you don’t want to tell the world what you paid for that asset? Fine. But why not take some time to explain WHY you bought it and, for that matter, why not communicate some of the good news that the portfolio company generates under your ownership. Deals are significant events that warrant communication. But if GPs want others to BELIEVE that they are not only transactional, financial investors, they might do well to actually communicate something other than a deal or an exit. Just a thought.

  1. April 20, 2010 at 11:32 pm
  2. April 21, 2010 at 12:45 am
  3. April 21, 2010 at 2:48 pm

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