Soft Capital – The Value of Reputation in Private Equity

Private equity attracts the brightest and the best, setting standards and creating change – at pace – other industries can only dream of. Investors enjoy excellent returns on their capital and the role and influence of private equity is only increasing: over the last decade the size of the private capital market globally has more than doubled.

But with this comes greater attention. Private equity is no longer private – even if it would like to be. Many of the largest firms in particular have expanded beyond the traditional buyout models that formed the cornerstone of the industry to include divisions dedicated to private credit, insurance, infrastructure investment and retail investors.

With this move to the more mainstream comes a period of greater scrutiny for private equity. Regulators poring over the detail. Politicians paying greater attention. Fodder for a media always looking to reveal more. Boards and management teams not just looking for capital, but the right capital and the right partner in an ever more exposed and competitive business world.

The link between how a business is believed and perceived to operate – its reputation – and its route to investors, to customers, to value, has never been more clearly drawn.

Private equity (generally) has a decent story to tell. It delivers much-needed capital, creates jobs, invests in critical businesses, supports the journey to net zero, and contributes to government tax coffers around the world. But is this message, the industry’s “soft capital”, being fully maximised?

The same is true in terms of the performance and contribution of individual firms, their funds and even individual portfolio companies. The reputation of all of these is inextricably linked and will impact future success: the ability to raise capital, to operate freely, to build and grow businesses and generate superior returns.

Together with Birchwood Knight, a specialist executive search firm for the communications sector, we set out to understand how private equity firms view reputation and their approach to communications. We spoke to communications leaders across a spectrum of private equity companies from global listed firms to mid-market players. We asked them what was and wasn’t in their remit, where the function sat in the organisation, how the firm prioritised reputation and where there was still some way to go, what they measured (spoiler alert, not much), how they were resourced, and much more.

To request a copy of the report “Soft Capital – The Value of Reputation in Private Equity” please email info@nepean.co.uk.