A strong brand is a must-have for private equity firms when it comes to fundraising, deal sourcing and recruiting. That’s the conclusion reached by a new study from BackBay Communications and PitchBook, a capital markets financial data and software company.
The study asked 45 private equity firms about the importance of branding, as well as what the best methods are for building a strong brand. Seventy percent regard a strong brand as "very important" with the remaining 30 percent saying that it was somewhat important.
Ninety-one percent of respondents said that the importance of a strong brand has grown over the past two years. Competition for deals (56 percent), uptick in the number of private equity firms (19 percent) and fundraising (19 percent) are drivers of that increase.
On the brand-building front, 42 percent of private equity firms say they are taking steps to increase their visibility, and 58 percent are increasing their marketing budgets.
How does a private equity firm build a strong brand? Strong investment returns (79 percent), investment discipline (63 percent) and creating a cohesive firm culture (58 percent) are rated the most effective means.
Respondents said that the best ways to leverage these attributes are personal meetings (63 percent) and conference speaking (58 percent), with websites (37 percent) and media interviews (32 percent) further down the list.
There's disagreement of the significance of social media. About one third (32 percent) of private equity firms said social media is a necessary channel to distribute firm news and views. While 26 percent of respondents said they are considering using social media in the future, 26 percent don’t see it as necessary for private equity.