How will UK firms know they need Private Equity?As Brexit negotiations continue to gain traction, and the UK consumer has truly woken up to the reality that there's a price to pay for leaving, one big wheel in the economy that's bound to be affected but isn't getting public - or business - attention is the Private Equity sector.
Even though a recent survey by Augentius shows that Brexit will have limited impact on European Private Equity, it certainly looks like it will have ramifications nonetheless.
The big question is how Brexit will affect the players in UK growth and what should Private Equity firms do to increase their recognition during this period?
Private Equity Boosts Economic Growth - QuietlyIt's a common perception among non-FT media (just read the Guardian's harsh P.E. section) that Private Equity firms are evil ventures that acquire companies to either consolidate them (cut jobs), cut expenses (cut jobs) or break them up and sell the pieces for (heaven forfend) a profit. However, we know that Private Equity has a lot more to do with job creation, international competitivity and economy building.
While Private Equity-backed companies only account for around 6% of total private sector employment in Europe, they're responsible for nearly 12% of industrial innovation. And their spending accounts for only 8% of all industrial expenditure on R&D. Not bad. But how come the average UK firm isn't aware of the value and availability of P.E.? Or put it another way... how come P.E. firms don't make this case loudly and frequently?
According to a study commissioned by the European Private Equity and Venture Capital Association (EVCA), Private Equity boosts innovation, productivity, and competitiveness, three elements that are vital for economic growth. The study also concludes that patents granted to private equity-backed companies tend to be more economically viable than patents on average. Case in point, data from the U.S., as quoted in the EVCA report, suggests that P.E. participation increases the number of citations for a patent by up to 25%. The technological significance and market value of a patent have a positive correlation with the number of patent citations.
On productivity, the study shows that Private Equity creates an enabling environment by providing capital for investment, supporting companies through periods of commercial or financial distress and by increasing the operating performance of portfolio companies.
A similar study by the Dutch Private Equity Council shows that Private Equity-backed companies are up to 50% less likely to fail when compared to those that are not equity-backed but has similar characteristics. How often do we hear this from from private equity firms themselves? Come on, P.E.!
The Brexit Impact - Eurozone DisdainIn a Private Equity Conference held in Amsterdam in November last year, Neil MacDougal, a managing partner at Silverfleet Capital, reported that investors are shying away from European-weighted Private Equity firms over Brexit fears.
According to MacDougal, investors are demanding that funds invest less than 30 percent in the UK if they are to commit capital. What this means is that less Geo-diverse UK Private Equity firms are likely to witness a slowdown as 2019 Brexit talks continue to grind. But where is their voice? Where can investors hear the rebuttal case?
It seems clear to me that Private Equity firms in the UK, need to up their communications game if they are to attract investment both locally and abroad. Investors outside the UK will need strong convincing that UK deals are viable. This is achievable through regular event, social and website case-making.
Video Marketing proves Private Equity Case in the UKI believe that a well-formed video communication strategy is the wisest tool for building evidence, busting myths and boosting competitive advantage in the foreseeable Brexit environment. If I were a marketer I'd rehearse my case, then make it repeatedly and everywhere. Given the wavering confidence in the UK market, the Private equity firms that strive harder to convince investors there's high market potential will likely establish a lasting competitive advantage.
There are few better ways to achieve this than by presenting educative information about the industry - and your firm - than through the highest trust-building medium. Through our experience helping private equity firms, we've come to learn that in finance, people are more trusting when they can see a face and hear the voice behind the service.
It's perhaps not surprising that the financial industry's leaders use video more frequently than other forms of marketing. Our recent survey of over 2,200 financial firms reveals higher video usage among leaders. We'll see how that trend changes over time, but as the sector's video usage is still relatively low, competitive advantages abound for the taking.