GP COMMUNICATIONS
More than a big deal?
IE Consulting principal Matthew Craig-Greene continues his analysis of
GP communications, examining the use of press releases in a challenging
buyout market
Last month, I shared some research that assessed the communications of these types of transactions (see Figure 2, below). While this may be
strategies of leading European GPs. This month, in a companion piece to unsurprising, it is, arguably, symptomatic of a significant issue: GPs are only
that report, we will shift focus slightly and take a look at what the 10 most communicating what they have to, not what they ought to.
active European buyout and growth capital investors actually have been GPs have much to communicate. Although the most significant and relevant
communicating. Delving into their online archives, the IE Consulting team events for their investors are clearly those that involve investment and liquidity
analysed the volume and content of almost 700 press releases issued by the 10 issues, and changes to personnel or corporate strategy, surely that should not
most active European buyout and growth investors in Europe from January mean that GPs should be silent with regards to other relevant events.
2006 until the end of March this year; from the buyout boom, through the Over the entire period, only 32 of the 692 press releases IE Consulting
economic crisis and (fingers crossed) out the other side into the recovery. analysed could be classified as non-transactional “marketing” releases. This
As can be seen in Figure 1, below, the volume of press releases issued by these category included charity events and sponsorship; awards won or shortlisted
groups fell roughly in proportion to the number of buyout and growth capital for; thought leadership releases that demonstrate a GP’s understanding of
deals completed in Europe until last year, when press release activity levelled the private equity industry or one of its investment verticals; participation at
out very slightly as activity continued to fall at the same rate. At the current run events and so on.
rate for the first quarter this year, press release volume will rise to close to 2008
levels against flat numbers for deal activity. Shout it out
Many private equity firms are extremely active in their local communities
Something to declare and in their involvement in local and global charities, so why not tell the
In terms of content, announcements from these investors since January 2006 community more about it?
have been weighted heavily towards investment and exit events. Almost two Of course, it might be argued that crowing about charitable engagements
thirds of all releases relayed information regarding the progress or completion is in slightly poor taste; it nevertheless seems strange that so few of the
Figure 1: Volume of deals and press releases, 2006-2010 (predicted) Figure 2: Press release content, 2006-YTD
Deals Deals
Press releases
Exits
250 1400
1200 Personnel
200
1000
Press releases
Corporate strategy
150 800
Deals
Portfolio
100 600
400 Marketing
50
200 Funds
0 0 Releases dealing
2006 2007 2008 2009 2010 (RR) with multiple areas
Source: IE Consulting research Source: IE Consulting research
16 Private Equity Europe / Issue 116 May 10
GP COMMUNICATIONS
communications broadcast by the top 10 European buyout investors are releases in 2006, compared with just over 50% in 2009.
designed to support these groups’ brands in a way not directly related to Aside from one group that barely issued any releases that were not directly
transactional events. tied to a particular transaction, the most active European buyout and growth
Stranger still is the lack of attention afforded to the successful activities of capital investors fall into two distinct groups.
portfolio companies. Only 50 of the 692 releases dealt primarily or secondarily Firstly, as shown in Figure 4a, below, there were those that increased
with this sort of news. Naturally, some GPs are better than others. LDC and non-transactional communication during the deal-slump of 2008-2009,
3i, for example, are among the more likely to share, while Belgian investment but have begun to abandon it as the quest for deals returned in late 2009.
house Gimv began a separate section in the press area of its website dedicated to If these significant GPs are to gain any lasting benefit from their external
portfolio news. If GPs are keen to demonstrate their hands-on, operational nous, communications, they will need to ensure that non-transactional releases are
why don’t they simply talk about it more? Creating a positive buzz in the private not an afterthought, a luxury indulged in only when deal activity is subdued.
equity press around a portfolio company can hardly diminish its value, after all. Even ignoring the artificially inflated proportions of non-transactional
communications derived from the scant press release activity in the first
No small talk quarter of the year, some GPs have maintained a commitment to this manner
So, the picture is clear: since 2006, GP communication through the medium of release (see Figure 4b, below). Whether they are able to maintain this focus
of press releases has maintained an unwavering focus on transactional throughout 2010 and beyond remains to be seen; if so, it will no doubt serve
activities – but have the very different investment environments of the past them well.
four and a quarter years had any impact?
Figure 3, below, shows the percentage of press releases with a subject matter Figure 4a: Proportion of non-transactional press releases (Group A)
relating to transactional activities and the percentage of releases with a non- 100%
transactional subject. Presented as a reference is the number of buyout and 90%
growth capital deals completed in each quarter. 80%
The most striking aspect is quite how closely (with the single exception 70%
of Q1 2007) the proportion of communications dedicated to announcing
60%
transactions of one sort or another (deals, exits, fund closings) tracks the
50%
actual deal activity in the market, right up until Lehman Brothers collapsed.
40%
Up until this point, of course, the proportion of releases with a non-
transactional subject traces the opposite path, over time. From that point 30%
onwards, the proportion of effort given over by communications teams to 20%
transactional and non-transactional releases has been erratic and uncorrelated 10%
to the movement of the market. Nevertheless, there has been a general trend 0%
in favour of more non-transactional communication: less than a third of 2006 2007 2008 2009 2010
Figure 3: Press release content and deals completed, 2006-YTD Figure 4b: Proportion of non-transactional press releases (Group B)
100%
100% 350
Transactional 90%
press releases
300 Non-transactional 80%
press releases
80%
Deals completed 70%
Percentage of press releases
250
60%
60%
200
Deals
50%
150
40% 40%
100 30%
20%
20%
50
10%
0% 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 0%
2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
Source: IE Consulting research Source: IE Consulting research
Private Equity Europe / Issue 116 May 10 17