Thursday, 30 August 2007

Marketing and Private Equity

It is a reality of today that hedge funds and private equity groups are building up portfolios of businesses, as the nature of the relationship between the owner and the manager changes in a capitalist society going global (please search for Martin Wolf on Global Financial capitalism). What does marketing have to do with this?

I argue here that marketing has the following specific roles to play in this context:

  • A big issue, highlighted in the recent UK debate on the private equity industry, is a lot of misinformation that pervades the market- eg, these groups have unfair advantages, which is exacerbated by a lack of transparency from the players. If the groups started to look at their reputation and their brand perception amongst key audiences, and started to take active steps towards mitigating this mis-information, I would argue they would not be subject to as much negativity as they are today. They need more marketing think.
  • I would also argue that just as you would integrate a portfolio of businesses along the lines of finance (cashflows, revenues, demand spikes etc), there is an opportunity to manage marketing across the portfolio as well- think about the cross- leverage between B2B and B2C businesses in your portfolio, and how a broader marketing footprint would be able to multiply the valuation across the portfolio- there are serious benefits to be gained.

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