If recent editions of PR Week are anything to go by, the initial stalking stage is good business for a number of major financial relations firms, but the in-house PR teams are commonly slashed once a deal goes through.
This would fit with a systems theory approach which proposes the benefits of public relations are best recognised in organisations with open cultures, where engagement and dialogue are paramount.
When the focus is entirely on the short-term bottom line areas such as employee and community relations will be seen as less important. Similarly, media relations activities are scaled back as PR is seen as a tactical, reactive, press agentry function rather than a strategic, pro-active, relationship building one.
The communications strategy is likely to be of a one-way, need-to-know variety. But is that the right approach? Aren’t the reputations of the companies that private equity firms aims to turnaround their biggest assets to be managed and nurtured to deliver optimum returns?
Isn’t stakeholder management even more critical when politicians and unions are concerned, even opposed, about the increasing dominance of this form of ownership? If nothing else, isn’t good pro-active media management necessary?
James Harding of the Times notes the difficulty of practising public relations in the closed world of the private equity industry, which is “chronically shy of publicity”
Private equity has been in the news all year, largely generating negative headlines. This week headlines come ahead of a meeting of the Treasury select committee regarding taxation.
On Friday, Peter Linthwaite, Chief Executive of the British Venture Capital Association (BVCA) resigned after criticism from members that he had failed to “fend off the rising tide of criticism from politicians and trade unions“.
The FT Alphaville believes the members set an unrealistic goal for the trade body:
Expecting the BVCA to mount a robust, well-argued defence of the indefensible is frankly unreasonable. Expecting them to do so in the full glare of the House of Commons, while being set upon by predatory politicians, well-versed in the art of the sound-bite and salivating at the prospect of glorifying themselves by coming up with the most scathing put-down for the next days papers, is bordering on inhumane. The MPs must be cock-a-hoop. No political downside on this one.
The private equity groups, who have used the BVCA largely as a shield behind which to conduct their business, should ask themselves how they have managed their own PR during the industry’s entry to the public consciousness. HSBC doesn’t rely on the British Bankers’ Association to manage its public image – it does its own talking.
This is excellent endorsement for public relations regardless of the ownership structure of an organisation.
It appears that those facing the hot seat in parliament this week have called on senior PR counsel – but this seems to be largely about the CEOs under fire being able to defend themselves rather than recognising the wider benefits and remit of public relations. This is reflected in a call for funding a “publicity war chest” to defend the industry.
There seems to be little recognition that key stakeholders – such as the unions, politicians and the media, let alone employees themselves – need to be engaged through two-way communications in the modern business world. The approach of private equity to public relations is dated and defensive.
Clearly those with the big incomes are used to getting their own way, with little explanation or accommodation. But they cannot complain about a lack of public understanding when their approach to communications is secretive, closed and manipulative.
Whether private equity is good for public relations is debatable – but clearly public relations could be good for private equity.