In the high-stakes world of private equity (PE), it’s not just about the money anymore. The competitive edge is often found in the strategic use of branding. A solid brand identity plays an increasingly important role when attracting investors and closing deals.
Whether it’s about establishing a strong brand for a PE firm or leveraging branding as a value-add for portfolio companies, the power of the brand should not be underestimated.
“Brand is not just an asset; it’s a currency,” says Kerry Bailey, Chief Communications Officer of Allegrow, The Business Modernization Agency. “In private equity, that currency can influence deal-making, attract the right investors, and multiply the value of portfolio companies.”
The Brand Influence on Deal-Making and Investors
Establishing a strong brand is paramount for private equity firms in today’s marketplace. Beyond demonstrating financial acumen, firms must stand out in an oversaturated market, where branding can be a distinguishing factor.
- Attracting Investors: According to a 2020 study by McKinsey, 84% of institutional investors consider brand strength as a key deciding factor when selecting a private equity firm. Bailey adds, “A robust brand signals stability, trust, and reputation. It’s the shorthand for ‘we know what we’re doing.’”
- Closing Deals: A strong brand can also impact deal flow. A well-branded firm has an advantage in persuading sellers to choose them over competing buyers.
“Branding is about communication. When a PE firm can effectively communicate its value proposition through branding, it builds trust and understanding vital to closing deals,” says Bailey.
Leveraging Branding for Portfolio Companies
After acquiring a company, private equity firms can unlock hidden value by implementing strategic rebranding. Here’s how:
Increasing Perceived Value: When a portfolio company undergoes a successful rebranding, it can increase perceived value. This perceived value can boost market position and customer loyalty, and attract potential acquirers. As Bailey puts it, “Rebranding is more than just changing a logo. It’s about aligning the company’s identity with its strategic goals and market opportunities.”
Expanding Market Reach: A rebrand can also open up new markets or better appeal to existing ones. This expansion can drive growth and potentially yield higher returns when the company is sold.
Attracting Top Talent: A compelling brand can attract top-tier talent, leading to stronger performance and, in turn, a higher valuation.
The Role of the PE Brand Strategist
Given the significance of branding in the PE world, the role of the brand strategist is essential. This professional understands the nuances of both the private equity industry and the art of branding.
“Every brand strategist brings something different to the table,” Bailey explains. “In the private equity context, you need someone who understands the unique challenges and opportunities in this sector.”
A successful PE brand strategist will:
- Leverage research and data to drive strategy: “Every decision should be data-informed,” says Bailey. “This ensures that the brand strategy aligns with the business strategy.”
- Understand the business model and culture of the PE firm and its portfolio companies: A brand needs to reflect the organization’s identity and values.
- Develop consistent and compelling messaging: This helps to communicate the firm’s unique value proposition to investors, portfolio companies, and other stakeholders.
- Adapt quickly to changes in the market: In the fast-paced world of private equity, the ability to pivot and adapt is crucial.
Conclusion: The Brand Power in Private Equity
Branding in private equity goes beyond aesthetics. It’s a strategic tool that can attract investors, facilitate deal-making, and add value to portfolio companies. In the private equity sector, a strong brand isn’t just a nice-to-have — it’s a must-have.
“Establishing a powerful brand in the private equity world requires deep understanding, strategic thinking, and an unwavering focus on value creation,” concludes Bailey. “It’s not an overnight process, but when done right, it can yield impressive returns beyond the balance sheet.”
Get a Free Brand Audit
Is your private equity firm leveraging the full power of branding? It may be time for a brand audit. A brand audit can identify gaps in your brand strategy, unlock new opportunities, and provide a clear roadmap to strengthen your brand.
Allegrow, The Business Modernization Agency, is offering a complimentary brand audit for private equity firms. This thorough assessment will provide actionable insights to maximize your brand’s potential.
Schedule your free assessment today.Book an Appointment