While we wrote this piece with our Private Equity clients in mind, there are good lessons here for anyone pitching to investors or delivering new business pitches.
What does it take to be one of 2017’s deal-closers? During the past few months we’ve been quizzing investors about what successful fund managers are doing differently.
We’ve identified six main themes from their feedback that you can apply to your next pitch.
Investors tell us that fund managers often ask what the investors wants to cover in a private equity pitch meeting… but then default to their standard spiel anyway.
Or investors ask a question, and are told that it will be answered later on in the presentation. More often than not, the question never gets addressed.
The best pitches are conversations. In fact, the more interaction the better, as this helps the investors feel engaged and interested.
Takeaway: Think of your pitches as conversations or discussions, rather than formal, one-way broadcasts. Ask questions, act on the answers and respond to questions from investors as and when they arise.
Investors say one of their key tests is how well fund managers interact with each other. Does the team present a united front, or do the individuals contradict, interrupt or ignore each other?
When one person is talking, do the others remain attentive and engaged? Or do they thumb their phone screen or look impatient until it’s their turn to speak?
Another warning sign for investors is when only the most senior GP speaks. They want to hear from everyone in the room. Otherwise, why are you all there?
Takeaway: Check if you are presenting as a team or a group of individuals. One way to do this is by role-playing different meetings and filming your pitch rehearsals. Analyse your team dynamics and polish your imperfections before investors see you.
Some GPs are the most consistently successful business people in existence – based on their pitches.
Bad deals are excised from track records, performance is adjusted in infinitely creative ways (explained in a footnote in tiny text) and simple questions receive vague, elusive answers.
Several investors told us they’ve terminated pitches immediately after encountering the above tactics. Your private equity pitch is the start of what will hopefully become a long-term relationship. That requires mutual trust, which can only come from transparency and honesty.
Takeaway: Investors know that if it sounds too good to be true, it probably is. Acknowledge what you haven’t done so well. Talk through what you’ve learned from it or how you’ve changed your strategy as a result. Then, when you speak about your successes, you’ll have far greater credibility.
Investors tell us they crave brevity. They don’t want to be taken though your 150-slide deck. They’re looking for a 20-minute high level overview followed by discussion.
Saying less, but in a memorable, engaging and succinct way, is better than blasting investors with too much detail.
Get across the heart of your strategy in three points, each backed up with evidence. Show your strategy in action, through stories about the impact you have had on portfolio companies.
Finally, don’t build up to a big reveal on slide 48. You may never get to it.
Takeaway: Write out everything that you want to say, then hack it right back. Edit ruthlessly until you are left with a compelling investment narrative, backed by evidence.
Investors tell us that many funds look the same. Naturally, they all forecast promising returns.
But as past performance is no guarantee of future returns, even funds with strong histories of market-beating growth need to demonstrate more than a good track record.
What does your team do differently? What is your repeatable ‘trick’? How will you consistently drive above-average performance?
Takeaway: Your pitch needs to convince investors that your team and fund are more attractive and transactable than the alternatives. What is your unique difference and how does it fit with what the investors are trying to achieve?
Too many fund managers are like politicians – they only campaign when they want something in return. Yet investors tell us that calls from GPs who aren’t trying to raise immediate capital are rare but welcomed. They enable both parties to check for fit without the pressure of a deadline.
Investors’ decision-making process can stretch from as little as several months to as long as whole fundraising cycles. So you’ll regret your inertia if you wait until you’re actively in need of investment.
Takeaway: Don’t hold back your fundraising fuel for once every five years; keep the fire burning continuously and you’ll be rewarded with warmer investor interest when your hand is outstretched.
We can work with you to ensure your private equity pitch is ripe and ready to impress investors.
Our team will strengthen every element of your pitch, including your:
Talk to us about your current situation and we’ll recommend the best way to get you and your pitch in shape before your next investor meeting.
You may also be interested in our Little Green Book for Private Equity Fund Managers. This short guide details what we do at each stage of the process and how we can help you overcome your challenges with investors.
Paul Farrow is a Partner at Benjamin Ball Associates. In this video from SuperReturn US East, Paul discusses the common mistakes made by Private Equity funds when communicating with potential investors. He reveals the unexpected personality trait that investors look for in fund managers, and why LPs don’t want to ‘be taken through your pitch presentation’. He shares essential advice that will improve your fund’s messaging, help you stand out and impress prospective investors. Click the play button below to watch:
We are the leading experts in private equity fundraising. Our clients include Permira, Deutsches PE and Frog Capital. We deliver fast, effective results.
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Erwin de Klein, Saemor Capital
Benjamin Ball Associates won ‘Best for Investor Presentation Coaching – UK’ in the 2016 Alternative Investment Awards and ‘Best for Financial Presentation Training 2016 – UK’ in the 2016 Wealth & Money Management Awards.
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