Private Equity Administrators (PEA) asks, what is the right solution to the GP/LP communication problem

In this series of blogs we are looking at transparency in the Private Equity world  and how it can be used to add value.

Our last blog highlighted a perceptions rift between GP and LPs in relation to standards of reporting as it is apparent that more and more GPs are struggling to meet LP’s increasing demand for information and we concluded with the question – what is the right solution to the communication problem?

Here are our top 10 suggestions for reducing the perception rift:

  1. Reconnect with your existing LPs – bite the bullet and start with an independently run perception study. Ask difficult questions and set the tone for honesty, openness and change. Ask them what they love / hate about your service offering and that of your  competitors and use this information to create a great communications strategy.
  2. Make sure you fully understand each of your LPs’ reporting requirements. Make time to speak to each of their senior execs, their board, the trustees, portfolio advisors, risk & compliance teams and any other individuals who influence and guide the LP’s decision making. Furthermore, make sure you understand the impact of their requirements on your resources and ensure that you can deliver. Don’t make promises that you can’t keep!
  3. Make asking for feedback a part of the day to day communications you have with your LPs and establish a process to deal with LP feedback (both negative and positive).
  4. Ensure that your Fund Administrator is “on board” and make use of service level agreements to ensure a consistent approach.
  5. Look at the communication culture within your own GP – if your own teams are on the end of poorly communicated personnel changes, reputational issues in the portfolio, inaccurate reporting and slow response times, how on earth are you going to manage superior delivery to your LPs? Cultural change must be lead from the top with well thought out and communicated strategy.
  6. Utilise your advisory panels, investor conferences and face to face time with your LPs to positively encourage the use of standardisation in data collation, check out SWIFT for PE in our further reading section at the end and look out for our next blog on standard reporting for LPs.
  7. Never underestimate the sensitivities LPs have over reputational risk – understand what reputational risks are most important for your client and set up a mutually agreed communications strategy to deal with each one, as and when/if they arise. Make sure you periodically check with your LPs to ensure there hasn’t been any changes to their priorities.
  8. Take time to engage with your LPs’ wider constituency – aka press, government and regulators and encourage your LPs to  participate in regulatory consultation processes to ensure that their concerns are heard.
  9. Ensure that your LPs gain maximum utility from your investor portal and encourage them to use it as the first point of call for all of their data needs. Make sure your Portal is easy to use and provide training and set up a Vimeo video to assist.
  10. Read a couple of useful pieces on information security, crisis communications and managing reputational risk – refresh the grey matter on new ideas available.

Remember good communications allow your company to shine in front of limited partners, competitors and others, strengthening a GP’s reputation as a custodian of its LPs’ resources.

We really enjoy communicating, so let’s talk:

For a deeper discussion on how you can bolster your communications with your LPs, feel free to call James in Guernsey or Peter in Denmark if you would be interested in hearing more:

James Orrick / +44 1481 730988 / jo@peadm.com

Peter Toyberg / +45 70 20 40 61 / pt@peadm.com

Further reading:

Adopting  standard data in PE – http://finops.co/technology/data/private-equity-market-can-new-data-standards-win/

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