Differentiation
in Private Equity Branding

Depending on which data source you use, there are somewhere between 4,500 and 5,000 private equity firms in the U.S. as of October 2024. To some extent, all private equity firms compete with one another for allocations from institutional LPs that comprise the bulk of their committed capital and assets in which they seek to invest. Some portion of these firms already pursue the attention of retail and/or high net worth individuals; that percentage is likely to skyrocket over the next 5-10 years.

It is no wonder, then, that the primary aim of most fund managers’ efforts with respect to branding and communications is differentiation. With so many superficially similar competitors, it becomes imperative to find ways to stand out from the crowd.

And yet so often, industry participants fail to locate this differentiation, ironically following something of a herd mentality in selecting terms and concepts around which to centralize their narratives. Let’s take a trip down memory lane, remembering the buzzy themes that have gone into and out of vogue over the past decade:

• Proprietary deal flow – the idea of accessing deals that nobody else could was appealing, until it became apparent that if EVERYBODY had proprietary deal flow then nobody really had proprietary deal flow, along with the fact that transactions of scale are likely to be in some way shape or form intermediated and trade at prices set by the market.
• ‘We’re operators, not financial engineers’ – this theme intended to distance firms from the perception that private equity simply capitalizes acquisitions in their favor without adding real value. It worked until every firm had a bench of operating partners (whether truly integrated or in name only) and now fails to set a firm apart.
• Sector specialization – fifteen years ago, there were very few firms calling themselves sector specialists; in fact, most positioned themselves proudly as ‘industry agnostic’ to display breadth of coverage; today, almost every firm is a sector specialist, even if their sectors of specialty are four or greater and comprise over half the US economy. Those older firms didn’t get replaced by new ones; while new entrants make up a percentage of today’s cohort, the bulk of the market are largely the same firms with new packaging.
• ESG and DE&I – these concepts were largely invisible up until 2020, at which point firms rushed to build new pages of their websites and shuffle the sequence of slides in their pitchbooks. The ESG page went from slide 28 to slide 4 for a while. (In most cases, it’s now back to slide 28.)

The current trend, in my estimation, is the presentation of one’s firm as ‘founder- and management-friendly’. The idea here is that a firm that treats its sellers and management teams kindly will win auction processes as a ‘buyer of choice’ – a source of differentiation.

The issue with this trend is that it presumes a default setting of other private equity firms acting as angry hippopotami during their courtships of target companies – anecdotally possible to some degree, but unlikely to be a successful approach over the long run.

Inc Magazine has created a Founder-Friendly designation for the industry. To apply, simply pay them $2,000 and provide one – yes, one – founder reference, and then wait to see whether you’re allowed into this exclusive club! You’ll be as anxious as a high school senior watching the mailbox for college acceptance letters, I’m sure.

With 269 honorees on the 2024 edition, this program provides Inc with over half a million dollars of revenue and a clear incentive to continue growing the list. The designation itself means nothing and will likely go out of vogue in the medium-term future – the larger the number of designees, the less impressive the award. The larger number of firms claiming a differentiator, particularly one as difficult to substantiate as ‘friendly’, the less that differentiator matters.

I’m Charlie Ittner, the President and Founder of Darien Group, a branding and communications agency focused solely on building brand equity within private equity. While we’ll talk a lot about private equity specifically in this video, our work spans the full spectrum of the investment management space – 300-plus clients over the past decade, including real estate investors, hedge funds, venture capital funds, investment banks, investment consultants, and more. Our mission is to align the business strategies of our clients with bespoke brand strategies that advance their objectives by positively influencing their stakeholders. And we do so from a uniquely deep knowledge base of the industry we serve.

So how CAN a private equity firm achieve differentiation in its messaging, its branding, its materials, and its digital presence? Is differentiation found – or manufactured? And in either case, how?

The answer, as often in branding, is an unsatisfying ‘it depends.’ Where differentiation is located or manufactured depends almost entirely on the firm itself, and whether it contains intrinsically ownable sources of differentiation. If it does not, which is often the case, or if its ‘differentiation’ is a melange of characteristics that don’t fit neatly into a sound bite, don’t worry – building a differentiated brand is always achievable, it just takes a nuanced approach to do so.

The more specialized a manager’s strategy, the less the burden on differentiating, and the greater the burden for the manager of educating one’s audience on the viability of the strategy itself.

Just before starting Darien Group, I worked as Director of Investor Relations for BKM Capital Partners, a real estate investment manager in Newport Beach. BKM has a pretty niche focus for a real estate investor – value-add light bay industrial, which is a different property type than classic big box industrial, and only in the Western United States.

If that investment criteria set sounds niche-y today; back in 2014 when I worked there, it was not just considered niche-y – it was seen as institutionally uninvestible. And so much of our pitch and our materials were based on educating investors on what the underlying product was and why it had certain advantageous dynamics.

Zoom ahead ten years and BKM has been quite successful in establishing this product type as investible, counting several state pensions among its LP base. Because BKM plays in a small and less trafficked pond, their identity as the big fish in that pond is an easy, authentic, and ownable anchor of differentiation, and the platform upon which the firm can build its message and content.

With our private equity clients, sometimes there are obvious cornerstones upon which to build differentiated messaging and branding. These are sometimes structural – a longer fund duration, or a commitment to relatively low debt capitalization on portfolio companies. They are frequently sector- or geography-related – I think of Paine Schwartz Partners in food and agribusiness or Rivean Capital with their focus on the DACH region of Europe.

But sometimes a firm has none of these things. As mentioned earlier, once your ‘sectors of focus’ comprise half the economy, it’s harder to brand and message around that. And let’s face it – on the surface, many private equity firms are doing pretty similar things. You try to enter an asset at a sensible or discounted basis, create value during the hold period, and then exit in a way that maximizes returns.

Firms above a certain size threshold have traditionally derived an advantage from name brand recognition. When your flagship fund can raise $5 billion or more, your center of gravity is significant enough that it should easily attract capital, top tier talent, and investment opportunities. But, as competition for capital has become fiercely competitive, even some mega-fund managers have struggled to hit their hard-caps and have been forced to refine their investment strategies and restructure the size of their investment teams.

[STATISTIC HERE: IN 2023, THE 25 MOST SUCCESSFUL FUNDRAISERS COLLECTED 41% OF AGGREGATE COMMITMENTS TO CLOSED-END FUNDS, WITH THE TOP FIVE MANAGERS  ACCOUNTING FOR NEARLY HALF OF THAT TOTAL. SOURCE  https://www.mckinsey.com/industries/private-capital/our-insights/mckinseys-private-markets-annual-review]

The impact of fundraising concentration is especially challenging for MANY of our clients in the lower-to-middle market. There is a sentiment that there is less room for the over-crowded middle market managers and other, larger players may seek to consolidate the top performers. We’re not saying that this WILL happen, but we are saying that the burden of differentiation is greater than ever.

Despite clear consensus on the importance of branding, many firms still struggle to establish a strong market presence. A recent SuperReturn and BackBay Communications survey revealed that while 82% of private markets professionals believe having a strong brand is "very important," nearly half of the private equity firms surveyed rated their brand awareness as "fairly weak" or "not very strong." Only 13% considered their brand "very strong," highlighting a disconnect between the acknowledged value of a strong brand and the ability to achieve it.

What can firms do with branding, messaging, and communications efforts in order to stand out from the pack? How can they bend these tools to their advantage to achieve ‘differentiation’?

There was a time, perhaps 5 years ago, definitely 10 years ago, when simply professionalizing one’s brand and digital presence was sufficient to stand out. The bar was embarrassingly low – I don’t think that’s a controversial statement to make. I can’t count the number of initial conversations with prospective clients in which the client was downright sheepish in discussing the eyesore that was their existing website. I used to joke that many firms’ sites were a lot like having a rusted out sedan on cinder blocks in the front yard of an otherwise beautifully manicured home.

But the industry has largely resolved this. And while firms still try to get more lifespan out of websites than they should, resulting in tired-looking sites here and there, the general professionalism has improved immensely. So, given that a decent brand and website is now table stakes, how do we go further?

I have two answers to this question: first - define your brand strategy and build it. Second, align your brand with content marketing .

 The first is a matter of process and thoughtfulness.

All creative agencies follow pretty much the same brand-building process: they research the client and its immediate competitive space, develop rough ideas to work through with the client, reach agreement on the core concept, and then execute toward deliverables. It’s logical – you wouldn’t start to build a house without a blueprint, and you wouldn’t draw a blueprint without first consulting the homeowner regarding their needs and preferences.

We go beyond the standard process - we start from our deep roots in private equity, leveraging our knowledge of how the industry works, and dive deep to seek out clues to bridge our clients’ business strategies with their brand strategies.

What we are looking for during our research process – the bulk of which is interviews with client team members and relevant third party stakeholders – are threads of ownable and authentic differentiation. Again, if the client is doing something esoteric, the burden of identifying these threads is reduced – the light bay industrial real estate manager can simply be that – there aren’t 50 other managers doing the same thing. But if we’re in more crowded territory such as the broader U.S. middle market PE space or Sun Belt multifamily, it becomes very important to try to isolate some ownable threads with which to weave a client’s brand’s tapestry.

Every firm has something they can hang their hat on. Often it is helpful to have an outside set of eyes to assess the landscape and identify these things. Solomon’s Paradox says that we tend to think more clearly and rationally about other people’s issues than our own – a well-educated external resource can be helpful simply for this reason.

In our work, we have substantive conversations with Investor Relations executives, transaction leads, senior leadership, portfolio company management, and other critical voices. We are mining for messaging gems at an appropriate level of depth. As an agency, we believe that without sufficient comprehension of the industry itself, it is impossible to have sufficiently meaningful dialogues to get there.

I’m reminded here of our work with Harvest Partners. Harvest has been a remarkably successful GP over the past decade, with a new generation of management leading superstandard growth and proliferation – larger funds, new strategies, and strong returns. However, there wasn’t anything pithy or categorical around which to build differentiation in their brand – no single sector focus, for example.

In our interviews with Harvest leadership, as well as portfolio company management, our team at Darien got a sense for an unusually entrepreneurial, ambitious, and exciting firm relative to the company’s age (40 years) and fund and team sizes, dogged in pursuit of its mission and bursting with energy to get there. They had also clearly instituted appropriate organizational rigor to channel this energy. From a sourcing standpoint, they seemed to somehow manage to ‘boil the ocean’ to see EVERY deal and then select those that fit their model and to pursue them with extraordinary commitment.

The brand we built for Harvest, shown here, is not specific to a sector or fund structure, but it is specific to the personality of the firm – the balance of creative entrepreneurism with strict discipline, as depicted metaphorically by the circular motion graphics laid over a grid.

The tagline, “A Blueprint for Growth”, reinforces this dynamic – blueprints are at once artistic drawings of what could be and schematic instructions for a homebuilder. We, and the client, felt that this fit nicely with their approach to investing.

This brand wouldn’t work for most of our clients – which makes it an ownable brand for Harvest. Juxtapose this against the sea of private equity websites whose primary image motif is men in suits shaking hands in a boardroom against a navy blue backdrop, and the differentiation becomes even clearer.

I’m talking a lot about websites here for the sake of making these concepts concrete, but the same approach is important with any cornerstone branding project – your investor presentation, your seller-facing materials, video content, ESG Reports, etc. Finding ownability and authenticity, and then constructing your story around those aspects rather than aspects that ANY firm could claim, is the key to making your communications efforts memorable and impactful.

So the brand is built and the second phase of differentiation is to start some sort of content marketing. And unlike my earlier answer of how to achieve differentiation (‘it depends’), this one is universal. There is not an investment manager in the world that would not benefit from beginning to develop this capability. And here’s why.

The alternative investment industry continues to get more crowded and competitive. It also continues to grow, so it’s not all bad news – the pie is larger, but there are more people looking for a slice. In different periods, we have different scarcities – of capital allocations, assets in which to invest, talent for your team, etc.

Simultaneously, the way we as humans (in general) and as individual participants in investment management consume information and make what would be called ‘purchase decisions’ in B2B marketing continues to evolve at an exponential rate. At an industry conference this year, I was shocked to see the number of audience members scrolling LinkedIn during panel sessions – it was like teenagers on TikTok during a particularly dry precalculus lesson.

You need to communicate more, and you need to do so in the places where your audience lives. Your constituents are hungry for information about who you are and what you do – and maybe even WHY you do what you do. This was stated explicitly by a panel of influential LPs at a conference I attended recently as they addressed a room full of sponsor IR executives – to paraphrase, they said “we read every stitch of copy on your website, we search LinkedIn for information about you, we want to hear from you more.”

This observation is corroborated by SS&C Intralinks’ 2025 LP Survey, in which increased ‘relevant thought leadership and industry-related content’ was the second highest ranking desire of LPs when asked what they’d like to see GPs change with respect to communication. This answer ranked just behind ‘more frequent conversations’ – so, they want content from you almost as much as they want more time with you.

Using institutional LPs as our example audience here, you already create content for these people. Your AGM – whether it’s a high-budget event with new video case studies every year or more of a bare-bones reporting on financial results – that is a day of programmed content. Your investor presentation during fundraise or offcycle – also content.

The problem is that most of you only deliver content when it is expected of you or required functionally, sort of like attending church only on Easter Sunday and Christmas Eve. You rely solely upon person-to-person interactions, which are critical and awesome, but difficult to scale as your LP base grows, and easy to dissipate during busy seasons. This leaves a LOT of dead air, and your investor audience may feel that they only hear from you when you want something – say, a fund commitment.

Imagine a quarterly portfolio update newsletter for LPs – NOT synonymous with your quarterly financial result reporting – whose only purpose is to inform, educate, and perhaps even entertain with news from across your fund portfolios. This newsletter isn’t ASKING for anything. It’s simply a way to provide value – qualitative information – without expectation of value in return.

Could you increase emotional resonance between LP and portfolio this way? Could you showcase examples of your team making the type of improvements at the portco level that your pitchbooks claim is your recipe for performance? Could you simply get a little reputational boost for proactively communicating in a way that most firms do not?

Such a newsletter is one of dozens of potential channels for engagement. Video content, LinkedIn activation, blog content, even the old-style white paper – all of these can be vehicles for engagement with your audience.

I’m speaking a lot here about firms’ investor bases, but you can map these concepts to other audiences, most critically sellers and intermediaries, very easily. It’s not a stretch to imagine how relevant and thoughtful sector-specific content might warm up a business owner toward a dialogue, versus if the first time they hear your name is a cold call or email asking whether they’re interested in exploring transaction opportunities.

The bar on content marketing in private equity is VERY low right now – much like the bar was low on websites ten years ago. The early movers will have big advantages. Simply by participating, you will stand out from the crowd, AND you will begin developing a muscle that I believe will be a need-to-have, not a nice-to-have, in the near future.

In summary, differentiation derives from two main efforts: one, have you built the foundation of your brand, message, and materials with thoughtfulness, insight into your unique identity, and strong execution? Two, with that foundation built, what are you laying on top of it in order to engage your key audiences more frequently, and to give without expectation of reciprocation?

For too long, branding and communications has been treated much more reactively than proactively in our industry. This stems, in my opinion, from the industry’s historical posture of keeping the doors shut tightly unless otherwise absolutely necessary. The history of private equity media relations is basically crisis communications – how do we respond in case of emergency?

Legal and compliance departments and advisors are co-conspirators to this status, having established knee-jerk negative reactions toward any written communications that are not SEC-mandated. Their motivation – avoiding any chance of any issue, no matter how infinitesimal it may be – runs counter to the spirit of a strong marketing and branding program. It is a type of safetyism taken too far, where no gain is possible due to the long-tail risk of a regulatory wrist-slapping, to the detriment of firms’ individual and collective ability to establish their identities.

The result of all this non-participation is that the general public, including media members who clearly do not have a strong understanding of private equity, paint the entire industry with the same broad, negative brush. If you don’t believe me, Google ‘private equity articles’ and see what comes up. You’ll find smear pieces from The Atlantic and The Washington Post focusing very closely on a small number of deals, sometimes by the same small number of firms.

Public perception represents an antiquated view of the industry, focusing only on cost-cutting, dividend recaps, bankruptcies, and private equity generally being a bit of a bad actor within the US economy. As with many things in the media, one negative outcome such as the Steward Health Care System bankruptcy from this year, gets a ton of coverage, and the hundreds of positive stories get relatively little.

I’ve been working in private equity for over 20 years, and I’ve been managing Darien Group for 10 years, during which time I’ve gotten the chance to work with over 300 clients and to interact with hundreds more. I fundamentally disagree with the default negative setting that exists on this topic.

I think that the vast majority of private equity firms of today and of the future really are business-builders at their core. They are looking to genuinely and authentically create value in the investments they make. They are considerate of their stakeholders. They are transparent with their investors. They uphold their commitments to transaction constituents. They HAVE to be all of these things in order to have sustained success; if not, nobody will do business with them moving forward. We within the industry understand this, but the larger country and world for the most part do not.

It is critical that you get your positive stories out there into the world. Until and unless you do, people who do not know you – and that segment includes people whose businesses you might want to invest in – will work off a default negative assumption more often than not. The more that individual firms do a good job of communicating what they’re doing, of taking the time to truly define and highlight their positive differentiators and where they’ve created progress at the investment level, the better it’s going to be for the industry as a whole.

At Darien Group, we’re advocating for a new era of private equity branding, in which the standard posture toward digital communications is not ‘no comment’ but ‘come inside and let us tell you about all the exciting stuff we’re working on.’ We invite you to join us in this pursuit.

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