“Private equity investing is a relationship business. As more of our personal relationships move online, social media becomes a very cost-effective way to strengthen a firm’s corporate relationships”, as David Teten (@) observed in a 2013 article in PE Hub (@) (an online community for professionals in private capital).
The C-suite is already benefiting from social media
According to”a 2014 Global Social CEO Survey of 1000 US and UK employees in diverse companies, ranging in size from startups to Fortune 1000 companies”, “social media engagement by companies’ c-suite executives is more critical than ever”, as Meg Guiseppi (@) outlined in Executive Career Brand. In particular, the study found that:
“Conversations taking place on Twitter, LinkedIn…YouTube…and other social channels do not stop because management is not looking. When executives fail to speak for themselves, other voices fill the void and the conversations continue without them.”
“C-suite executives who embrace social media”, therefore, “gain a competitive edge” Guiseppi concludes.
Private Equity can benefit, too
In private equity, David Teten cites “Robert Bruner, dean of the Darden School of Business, [who] observed in an interview that social media is particularly important in origination because of the significance of ‘weak ties‘ in identifying investment opportunities. In addition, he predicted that the rise in importance of online networks will make the most credible players even stronger.” Teten “suggest[s] the reason for that is: As people consider doing business with others that they know primarily online, a known brand becomes a significant expediter of a potential transaction.”
Teten goes on to detail how some private capital market advisors are already benefiting from social media, including his own firm, ff Venture Capital.
But how can a private equity firm adopt social media effectively?
Considered adoption of social media engagement by private equity professionals will result in more deal flow and larger and deeper referral networks. But before embarking upon any social media effort, firms should educate themselves about what options are available and how to tailor a program unique to an individual firm. Becoming more aware of what leading firms are already doing is just one of the prerequisites to beginning a unique, tailored effort. Choosing which methods to communicate your unique message, what social channels to use, and which professionals to work with to adopt these efforts, are vital to get right before starting.
Important to keep in mind, however, is that the use of social media by the C-Suite consumers of middle market corporate advisory services is expanding rapidly. Hence time is of the essence.