What do LPs want from private equity funds at first investor meetings?

That’s the question I put to the panel at SuperInvestor 2015, the annual conference for private equity decision makers. On the panel were Catherine Lewis La Torre, Anna Dayn, Spencer Miller and Marc der Kinderen. Between them, they see hundreds of first investor meetings and they’ve seen them all – the good, the bad and the ugly.

Of the approximately 400 private equity funds they engage with, they eventually invest in about 10 of them. The intense level of competition for investment underscores the need for a high impact and successful first meeting. This was their advice.

Seven tips for first investor meetings from LPs

First investor meetings | Tip 1: Be punctual

“Show up on time and not try to reschedule 10 minutes before the meeting,” was Catherine Lewis La Torre’s simple advice.

First investor meetings | Tip 2: Tell stories

Your only goal from a first investor meeting is to get a second investor meeting. How do you do that?

Spencer Miller said, “I want to understand who they are; what the strategy is. Private equity fund teams can bring this to life by using case studies about investments. Case studies answer questions around competition, market positioning, strategy and value.”

First investor meetings | Tip 3: Start a long-term relationship

“What I really like to see is consistency, persistence and understanding,” said Anna Dayn. “We’re building long-term relationships, so I want to see recognition that this is a long game. In terms of understanding, it’s about finding the right balance with investors, staying on top of that and, after that meeting with us, following up, and not getting ahead of the process.”

 
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First investor meetings | Tip 4: Explain what makes you special

“For us it has to be very clear what exactly you do to create value,” said Marc der Kinderen. “What’s the return driver? What is your ‘trick’ that you can do repeatedly? We’re looking for groups that can explain to us what they are very good at, and go into case studies. Then our team can sit together and compare notes in a systematic way.”

First investor meetings | Tip 5: Send information in advance

“We always get the PPM in advance,” said Marc der Kinderen. “One of our analysts goes through that in detail. We get a 10-minute pitch from our analysts internally, before the meeting actually starts.”

“Out of the 100 first meetings that we have, 70 of them we already know, because they came three to four years ago. So our analysts will go back and get that PPM, compare with the current one, and we are prepared. We go in, we give them an hour and a half, we talk about things.

“After that we turn down half of them virtually immediately, mostly based on risk, if we think there is too much team risk. The other half we invite back. Then we work our way down to five per year that we invest in.”

Lastly, before you send your pitch book to investors, test it against these six questions first.

First investor meetings | Tip 6: Keep communicating

“Communicate if you close a deal,” said Spencer Miller. “Some GPs invite you to their AGM as a way of getting to know the organisation. There are subtle ways of building the relationship over a period of time.

“It’s rare to meet someone for the first time in the middle of fundraising and commit to them six weeks later. It’s normally a process of many months or years to build that understanding for a commitment to be made.”

First investor meetings | Tip 7: Make every meeting feel like your most important meeting

“The final thing for me,” said Spencer Miller, “Is that private equity fund teams have got to have all the energy, enthusiasm for the meeting as if this is the first meeting of the day – even if it’s the last.”

Professional support for the best chance of success

Benjamin Ball Associates prepares private equity teams for investor presentations. We combine our knowledge of the private equity sector with coaching, pitch polishing and advice. We improve the pitches and presentations of both funds and portfolio companies.

If you want to improve your pitch to investors call Louise Angus, Client Services Director on 020 7018 0922 or email louise@nullbenjaminball.com. We’ll make your pitch confident, memorable and effective.

Video: How Private Equity Funds can pitch, present and persuade more effectively

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: