The Role of Private Equity Marketing in Differentiating Your Firm

The Role of Private Equity Marketing in Differentiating Your Firm

Private equity has become an increasingly crowded market in recent years, with no shortage of experienced firms vying for the top position in new deal sourcing. In 2022, the private equity sector in the U.S. included approximately 5,000 private equity firms and 18,000 PE-backed companies, according to a 2023 report released by the American Investment Council.

Because of this, it is critical that private equity professionals know how to differentiate their firms in order to stand out among competitors—which is where the need for highly effective private equity marketing and branding strategies comes into play. In fact, a recent study revealed that 82% of private equity professionals believe it is “very important” for private equity firms to build a strong brand.

The overwhelming majority—86% of respondents—said the need for a strong brand has only intensified over the past two years, driven primarily by increasing competition for new deals (56%), a growing number of private equity firms in the market (41%) and demand for LP funds (41%).

One factor that is becoming an increasingly important focus for firms is the expansion of the asset class to new pools of investors—particularly individual investors who have not historically had access to private capital and where awareness continues to be very low. The RIA community was cited as one target group where having a strong brand will be critical in the coming years.

Yet, despite the recognized importance of branding, nearly half—47%— of the private equity firms that were surveyed described their brand awareness as “fairly weak” or “not very strong.” On the other hand, only 13% of firms were described as having “very strong” branding. With all of this in mind, it should come as no surprise that nearly 70% of those firms are planning to increase their investments in private equity marketing, with a primary focus on:

  • Email communications
  • Thought leadership content
  • Speaking engagements at conferences
  • Digital content like case studies and social media
  • Media relations programs

Other marketing tactics, such as advertising, sponsored content and podcasts, were identified as being a lower priority with fewer respondents looking to increase activity in these areas.

Regardless of the tactics that you’re looking to employ, it is exceedingly clear that building a strong brand—and, further, one that is differentiated—through effective marketing will provide your firm with the unique opportunity to communicate more efficiently to a crowded, fragmented and geographically dispersed set of audiences.

Here are five ways that your firm can enhance your private equity marketing:

1. Craft Key Messaging That Actually Resonates

When building a differentiated brand in the private equity sector, it’s important that your key messaging not only resonates with the investment community, but effectively communicates how your firm’s investment thesis, deal criteria and growth methodology will actually meet the needs of your constituents—from LPs and intermediaries, to business owners.

The following three key elements should be considered when developing key messages:

  • Consistency – Consistency is a huge part of any branding work. Your firm’s key messages should be consistent across all communication channels, from websites and pitch decks to social media posts and even Zoom/Teams backgrounds.
  • Frequency – We’re all familiar with the “Rule of 7,” which states that prospects must see or hear a message at least seven times before they take action. As such, the frequency of your communications—whether through email, social media or advertising—will help your firm break through the noise and stay top of mind.
  • Professionalism – All communications should be professional, polished and aligned with your firm’s overall brand identity. This will help to build trust and credibility within the investment community, in turn strengthening the reputation of your firm.

2. Build Thought Leadership Within a Particular Niche

One of the most effective ways that a private equity firm can differentiate itself is to strategically position the firm and its partners as thought leaders within a particular niche. This is achieved by creating a repository of highly relevant and useful content tailored to an audience’s specific needs, then regularly disseminating that content through earned media and social networks.

In fact, content marketing generates more than 3x as many leads as traditional marketing methods such as print collateral and event sponsorships—yet costs a whopping 62% less. By leveraging a marketing automation platform, your firm can greatly streamline the internal processes around content creation and promotion. Plus, it enables many of your marketing activities—from email and social media to digital advertising—to be largely automated, which ultimately frees up your team to focus on bigger-picture, strategic tasks.

Because it is a targeted strategy, content marketing attracts more high-quality leads that already fit within your firm’s specific investment criteria. By strengthening the perceived expertise and reputation of your firm, this opens the door to more meaningful connections and business opportunities—ultimately resulting in a higher volume of proprietary deals.

3. Maximize the Impact of Your Digital Marketing Efforts

As capital, operations and many of the other levers that were previously relied upon to source and close deals have become commoditized, digital marketing has emerged as an incredibly powerful differentiator for private equity firms—giving those that embrace digital a distinct competitive advantage. Yet, your strategy doesn’t need to be complex to be effective.

In fact, it is estimated that fewer than 5% of lower middle-market funded sponsors are even employing the basics of digital marketing, such as a polished website, regular social media content and email marketing campaigns. Although the numbers are slightly higher for middle-market firms—which may be earlier adopters with access to more resources—there’s still an enormous opportunity for firms to leverage the power of digital marketing.

Not only should your website be responsive and mobile friendly with clear calls to action, but it must serve as an invaluable resource filled with helpful and engaging content that provides a solution to a particular need. An SEO strategy that optimizes your content for search is also important for gaining placement among top search results, which will increase your firm’s visibility and establish authority. In fact, websites with a blog see 434% more indexed pages.

It’s also important to keep in mind that what happens after you hit “send” on your digital content holds just as much weight. By regularly tracking and evaluating key analytics metrics, your firm will gain the necessary insights in order to identify acquisition targets, raise capital for new funds and accelerate the growth of your portfolio companies.

4. Be Authentic in Your Private Equity Marketing

When marketing your private equity firm, authenticity is incredibly important. However, it can be very difficult to communicate authenticity through a company brand given that its main purpose is to tout a firm’s experience, history of closed deals and industry connections.

It is far more effective and engaging to shift the focus away from the firm itself and instead toward individual partner branding. Not only does this build more trust, but it also allows intermediaries, business owners and LPs to connect with your firm on a deeper level. Here are a few guidelines for incorporating more authenticity into your marketing:

  • Focus on the tenets of good storytelling
  • Avoid “hyper-sanitized” and/or generic corporate speak
  • Adapt content to your audiences’ limited attention spans (think video!)
  • Emphasize quality over quantity

For example, a video-focused content strategy could be used to share your firm’s ethos—from who your partners are and what they’re passionate about, to how your firm has supported its portfolio companies in their business growth. LinkedIn is also an incredibly popular platform where individual partners can demonstrate authenticity and build personal connections.

5. Develop Pitch Decks That Differentiate Your Brand

Despite the heightened focus that investors have placed on quantitative data in the private equity space in recent years, the average GP presentation deck features a relatively low frequency of use when it comes to certain quantitative terms such as:

  • Multiple expansion – 23%
  • EBITDA margin – 12%
  • Loss ratio – 11%
  • J curve – 5%
  • PME – 5%

In fact, a 2019 Private Markets Due Diligence survey by eVestment revealed that 68% of LPs rated loss ratio as an “important” or “very important” metric to employ during the due diligence process. PME was also viewed as important by the majority of LPs.

With the rise of data-driven due diligence in the private equity space, quantitative data and analysis is now in high demand among many LPs. With this in mind, the inclusion of quantitative data and related terms in your pitch deck can serve as a major differentiator with investors while more effectively addressing their due diligence needs.

Whether you have years of experience leveraging the power of marketing to tell your firm’s story or are just dipping your toes in the water, there is significant untapped potential for marketing as a key differentiator in private equity. This will only increase as new AI technologies, social networks and other digital tools continue to emerge in the market. By building a strategy around your marketing efforts, you can gain a distinct competitive advantage and set your private equity firm apart from the crowd.

This blog originally appeared on the Private Equity Marketing Association website.

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About The Author

As content manager at Roopco, Katie leverages the art of storytelling to create an engaging, on-brand content strategy for our diverse range of B2B, professional services, corporate and non-profit clients. She has a decade of experience in content writing and editing, content marketing, PR, brand strategy and project management.