Friday, June 20, 2008

Private Equity: A Failure to Communicate?

It appears that private equity firms — in both Europe and the U.S. — are suffering from an insufficiency of public relations.

“Private equity has reached a ‘critical point’ in Europe and needs to act fast before Brussels imposes legislation on the industry,” says Jonathan Russell, managing partner and global head of buyouts at 3i Group PLC and the new head of the European Private Equity and Venture Capital Association (EVCA), in a recent interview in the Financial Times.

Private equity firms are facing sharp criticism in Europe, where at least one leading politician has branded them “locusts.” In the U.S., they are loath to publicize returns and fiercely guard the specifics of the companies they own, despite demands from media and political groups for more transparency.

Russell admits that private equity’s own failure to communicate is partly to blame for the political backlash. “We have a fundamental gap here,” he says. “There is an impression of private equity born out of partial knowledge and some prejudice around that, some of which has roots in reality, but a lot doesn’t.”

Several of my clients in New York City are private equity firms. Through strategic PR, we have found a way to bridge the gap between secrecy and transparency to find a happy medium that works for all parties.

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Are You a TimesPeople Person?

Formerly dubbed the “Gray Lady” for its staid appearance and style, The New York Times has just announced the beta version of TimesPeople, a new social network for readers of the newspaper. If you’re a marketing consultant, financial communications professional, PR practitioner or just a news junkie, you may want to check it out.

Unlike MySpace, it’s not a place to find a potential soulmate. TimesPeople is much more like Digg, in that it lets you share interesting things you find on the NYT website with others in the network. Users of TimesPeople can build up friends lists and can see a “news feed” of the stories their friends are recommending, sharing and discussing.

Currently available only as a Firefox browser add-on, when TimesPeople is formally launched, it will work with all web browsers.

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Drug Companies Agree to New Rules on DTC Advertising

Pharma marketing consultants and health PR firms should be aware of a recently announced moratorium on new drug ads.

According to Ed Silverman, author of the Pharmalot blog, a number of leading drug manufacturers — including Merck, Schering-Plough, Johnson & Johnson and Pfizer — have agreed to a six-month moratorium on advertising new drugs.

The pharma companies said that the six-month moratorium formalized industry practice, which is to educate doctors before moving to consumer communications. The change came in response to a request from Michigan Democrats Bart Stupak and John Dingell, members of the House Energy and Commerce Committee, who had originally requested a two-year voluntary waiting period on DTC.

The pharmaceutical leaders will also begin adhering to American Medical Association guidelines about using actors to portray physicians. At least one marketer, J&J, says it won’t use doctors in ads to discuss the benefits of a drug.

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How to Sabotage a Meeting

A Simple Sabotage Field Manual — produced in 1944 by the U.S. Office of Strategic Services, the predecessor to the CIA — was recently featured on the popular blogspot Boing Boing.

Among the tactics recommended to saboteurs in the WWII-era manual are techniques for “general interference with organizations and conferences.” Sadly, many are standard operating procedure in some New York City PR and IR firms … though, happily, not at Makovsky + Company!

1. Insist on doing everything through “channels.” Never permit short-cuts to be taken in order to expedite decisions.
2. Make “speeches.” Talk as frequently as possible and at great length. Illustrate your “points” by long anecdotes and accounts of personal experiences. Never hesitate to make a few appropriate “patriotic” comments.
3. When possible, refer all matters to committees, for “further study and consideration.” Attempt to make the committees as large as possible — never less than five.
4. Bring up irrelevant issues as frequently as possible.
5. Haggle over precise wordings of communications, minutes, resolutions.
6. Refer back to matters decided upon at the last meeting and attempt to re-open the question of the advisability of that decision.
7. Advocate “caution.” Be “reasonable” and urge your fellow-conferees to be “reasonable” and avoid haste which might result in embarrassments or difficulties later on.
8. Be worried about the propriety of any decision — raise the question of whether such action as is contemplated lies within the jurisdiction of the group or whether it might conflict with the policy of some higher echelon.

It’s a cautionary tale for PR, IR, branding, financial communications and B2B marketing communications firms — and, indeed, for all consultants in the professional services space!

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