What private equity could do to invest in goodwill

Record levels of fundraising and some big buyouts have propelled private equity funds into public consciousness. But their investment plans seem not to extend to websites that address the interest they are creating, says David Bowen.

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Private equity companies may be run by clever people, but they don’t seem to know much about the web. Either that or they have not noticed that they have some dodgy reputation issues. I suggest they look at the site belonging to a man who is acutely aware of his reputation, France’s presidential finalist Nicolas Sarkozy, to pick up a few tips.
The Financial Times last week carried a supplement on private equity which carried (twice) an already well-used photograph of Damon Buffini, managing partner of Permira, trying to ignore placards waved by supporters of the GMB union. They were particularly keen to contrast redundancies made by Permira-owned Birds Eye with the money earned by Mr Buffini and his mates.
I turned to the Permira website to see if it had anything to say to the placard wavers or, perhaps, to the curious onlooker who wanted to understand the group’s side of the argument. It does not. The site wears a dark pinstriped suit both in its design and in its absolute focus on business. It is talking to business partners, in business language, not to the rest of the world.
The only possibly relevant document I found was a downloadable publication called ‘Economic and Social Impact of Venture Capital and Private Equity in Spain’. It was funded by the industry and contains the conclusion that financing of this sort “grew much more quickly and in a more solid way than those who had not seen such backing”.

Throwbacks to a time before the ‘r’ word

This is depressing. In the old days (and I’m talking last century), corporations with ‘reputation issues’ would ignore them on their websites. They would transfer onto their websites the brochures they handed to their clients, and think that the job was done.
Then they discovered their websites were being visited not only by their customers, but also by a great array of people who wanted to know about their attitude to life and why they were being beastly to us here or trying to poison us there. Look at any oil company for its views on the environment; or to a pharmaceutical site for thoughts on animal testing. Online reputation management is big.
Why is Permira not joining in? Maybe because none of its competitors is. The grand-daddy of the industry, Kohlberg Kravis Roberts, has a simple and cleanly designed site that advertises its global reach, explains its ‘value creation’ philosophy and lists its investments. It has a press release archive, a couple of speeches and a partner log-in, to a password-protected area of the site. That’s all.
Blackstone has the same formula, albeit with a rather chirpier tone of voice. Carlyle Group has a well-organised portfolio and also a careers section, but otherwise nothing distinctive.
I cannot think of anything to say about Texas Pacific, Providence Equity, GS Capital Partners or Apollo Investment except that they are more of the same. Some are slicker (Apollo), some less so (Providence), but they all have the same basic elements. None of the private equity sites I looked at made any attempt to talk to anyone but a business-focused visitor.
I can see why. There would be peer discomfort if one of the companies did break ranks and started using its site to talk to the outside world. Maybe it would seem wimpish. It would certainly make the others wonder if they must do the same.

How to engage with the world

But it seems to me that any company that does seize the reputation bull by its horns will in the end be doing the whole group a favour. Private equity companies are not immune from the glare of publicity, however private they are – you just have to count the column inches in the press to see that – and I suspect they care more about their reputations than they would like to admit. So what should they do?
Well, there are many ways to state your case online. A simple one is to carry a question-and-answer section. Soft drinks giant Coca-Cola has a ‘Myths & rumors’ section on its Contact page, where it tackles statements such as “Coca-Cola contributes profits to Israel” and “Soft drinks cause kidney failure”. The US’s Central Intelligence Agency (CIA) has Frequently Asked Questions that include “Does the CIA spy on Americans?”. Nestlé, the world’s biggest food and drinks company, has a complete site dedicated to defending attacks over its baby milk promotion. And, as said, oil and pharmaceutical companies use their sites to state their cases in detail.
But if they want to leapfrog the corporates, and use a medium that is both effective and state of the art, may I suggest video à la Sarko. Mr Sarkozy has a site built round NS TV – you can probably guess what the initials stand for.
The battery of videos include Débattre/Participer, which show French voters debating and participating by asking questions to camera such as “What are you going to do to let us work more?”, “What do you think of polygamy?”, “Who is going to pay for my parents’ retirement?”. Mr Sarkozy then answers them, also to camera, though in a different place.
It works well because the video allows him to inject a degree of emotion that would be impossible with text. It helps. of course. that he is a practised speaker, but the mere fact that he is there looking at the camera lends, it seems to me, weight to his arguments.
This is just one example of the use of video to make a case. The commercial currently running on Shell’s home page is another, even though it uses actors.
If private equity companies can scrape a few pennies together to do something, just something, they may find the return on investment in terms of increased goodwill is startling.
First published on ft.com 27 April 2007

First published 02 May, 2007
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