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Could You Be More Persuasive With Investors? Private Equity White Paper- Benjamin Ball Associates


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Could You Be More Persuasive With Investors? Private Equity White Paper- Benjamin Ball Associates

  1. 1. benjaminball.comCould you beMore Persuasivewith Investors?A white paper for private equity firmsPrepared byBenjamin Ball Associates
  2. 2. benjaminball.comOUR EXPERIENCELouise AngusBenjamin Ball Associates1 King Street, London, EC2V 8AU+44 20 7193
  3. 3. benjaminball.comEXECUTIVE SUMMARYWhen pitching to investors, you have one chance to make a good impressionOur research amongst experienced GPs and LPs shows strong and consistentviews about what it takes to be successful in fund raising.Benjamin Ball Associates has distilled their best practice fund raising advice into anessential 7-step process:1. Know your LP – do your research beforehand2. Be clear about what you are offering – have a simple message3. Make it easy for the investor – structure your meeting and story well4. Keep the PowerPoint short5. Be honest, be straightforward6. Make sure you look good as a team7. Aim for a long-term relationshipBenjamin Ball Associates are presentation experts who help fund managers andcompanies look and sound impressive when communicating with investors. Theydo this by crafting powerful investor stories, clear presentation materials andengaging performances in pitch meetings.Benjamin Ball Associates1 King Street, London, EC2V 8AU+44 20 7193
  4. 4. benjaminball.comSTEP 1: KNOW YOUR LP – DO YOUR RESEARCHBEFOREHANDWhen fund-raising, the investor presentation is only a small part of the process. To lookand sound impressive, there are essential rules to follow. For example, you must researchyour LP before meeting.The checklists that we produce at Benjamin Ball Associates help you identify exactly whatinformation is most useful before each meeting. For example, you should establish whatsimilar investments that LP currently holds and know the professional background of eachperson you are meeting.To be successful, you need to know to whomyou are pitching. By doing your research, youcan have a proper conversation with thatinvestor, rather than just pitching yourself.“You need to understand what we LPs arelooking for and how we work.” says TomChandos of Esmee Fairburn Foundation “For example, all our initial screening is handledby Cambridge Associates, so you need to impress them first.”STEP 2: BE CLEAR ABOUT WHAT YOU ARE OFFERING – HAVEA SIMPLE MESSAGEA consistent theme from LPs and GPs we spoke to is the importance of making it easy forthe investor. Too many funds over-complicate their investor proposition. A fundamentalpart of the work Benjamin Ball Associates does is to transform complicated stories intosimple clear messages. Ideally, one message.Once developed, this message thenunderpins all elements of fund marketing andcommunication.Conrad Tsang of Baring Private Equity Asiasums it up perfectly when he advised, “You want a single short memorable message. Itmakes it much easier for the LP. For example the line ‘A Chinese Private Equity HealthcareFund’ it’s clear and simple”. This point is emphasised by Tina Wei of FLAG Capital “Youneed to be clear what it is you are trying to sell.”“Every LP is different. Thebetter you know them, the betteryou can connect with them”Stuart Schonberger, CDH Investments“You must have one simplecore message”Tina Wei, FLAG Capital
  5. 5. benjaminball.comSTEP 3: MAKE IT EASY FOR THE INVESTOR – STRUCTUREYOUR MEETINGCrafting a powerful and simple story is not easy. But it is the essence of a strong successfulpitch. One piece of advice we give is to keep first pitches at a high level. They should bemore about the What, the Why and the Who of the fund rather than the How.So that you start with the right messages,the more you can demonstrate thealignment of interests between the LP andthe GP the better. An LP is looking fordrive, hunger and stability. So this needsto come across. In later pitches you needto reinforce these attributes.Benjamin Ball stresses the importance of understanding the basic psychology ofpersuasion, including audience attention levels. “Using these ideas to structure your pitch,you can be much more persuasive.”“Have a clear story.” says Sherry Lin, of Mousse Capital. “You might even do some PR sothat people have heard of you beforehand.”Stuart Schonberger reminds us that fund-raising is no different from marketing. “You needto have a conversation with the LP and connect with them.”Stuart is positive about the value of pre-marketing to LPs before you start formalfundraising. “You should go out early with a 5-10 page book. LPs don’t want to see youonly when you are fund-raising.”STEP 4: KEEP THE POWERPOINT SHORTA common mistake we see from our clients is a long and complex pitch book. There is amisconception about the use of PowerPoint and how best to get a powerful investment storyacross. There is no point creating good looking but lengthy and unfocused documents. AtBenjamin Ball Associates we create powerful targetted documents that make a real impact.Benjamin Ball Associates puts a lot ofeffort into creating high-impact visual aidsso that the fund and the team stand out.“It’s all about avoiding that dreadful feelingof someone turning the pages of aPowerPoint document” says BenjaminBall.STEP 5: BE HONEST, BE STRAIGHTFORWARD“The goal from your first meetingis to get another meeting. Nomore than that”Lucian Wu, Paul Capital“Keep your pitch books light.Leave the detail to be discussed inthe second or third meeting”Lucian Wu of Paul Capital
  6. 6. benjaminball.comAlthough it seems an obvious point, many funds fail to understand this. Because the fund-raising process is all about building trust and showing integrity it is more important than everto be completely open and clear with your potential investors.Tina Wei of FLAG Capital is clear what impresses her: “So many people are reluctant totalk about their mistakes. One fund stood out when we met them. They started by talkingabout the mistakes they had made and what had been learned from them.”Alice Chow, of Squadron Capital recommends: “Beware of overused hype, such as talkingabout your ‘good deal flow’. A good PE fund does not have deal flow; it goes out and findsits own deals.”Tom Chandos knows what he prefers“What I like to see is a low bulls**tquotient. For example, I’ve seen a lot ofpeople trying to create an artificialdifferentiation about their fund. LPs cansee through this.”Conrad Tsang has an interesting angle. He suggests taking along your deal list. “The dealis the essence of the PE fund. LPs love talking about your deals. Then if you say you needso much money to close this particular deal, it is very real and tangible.”“When in doubt, tell the truth.” Tom Chandos recommends.STEP 6: MAKE SURE YOU LOOK GOOD AS A TEAMBecause investors are assessing the management team, its ability to execute the strategy,and how well they work together, you need to show how effective you are: individually andas a group. That is why at Benjamin Ball Associates we do a lot of our delivery training withvideo cameras.As well as improving individualperformances, we also analyse how theteam interacts and what to change tomake a more powerful impression.“What I look for is team dynamics,” says Tina Wei of FLAG Capital. “For example, bodylanguage is important.”“Make a lasting impression in yourfirst meeting”Alice Chow, Squadron Capital“You can tell a lot if just oneperson in the team does all thetalking”Tina Wei, FLAG Capital
  7. 7. benjaminball.comSTEP 7: AIM FOR A LONG-TERM RELATIONSHIPBecause the first meeting with an investor is like a first date, it is critical to get that meetingjust right. Which questions you ask, how you interact, and how you tell your story all addsup to an impression that will determine whether you get a second meeting or not. That iswhy at Benjamin Ball Associates we spend so much time with our GP clients role-playing alltypes of LP meeting. In this way, when the first real meetings happen, the GP team is fullyprepared.Leeong Li of Commonfund Capital says “Welike to see thoughtfulness. We track peoplethrough a few funding cycles; then we cansee how they work.”“This is a long term business. You will be in touch with LPs for 5, 10 or 15 years” saysStuart Schonberger of CDH. “It’s about connecting and making it personal.”Research by Professor Amy Cuddy at Harvard Business School shows the importance oflikeability in professionals pitching to financiers. A lot of the work Benjamin Ball Associatesdoes with asset managers is to ensure likeability by creating engaging documents,messages and personal interaction.BACKGROUNDBenjamin Ball chaired a series of Panels at SuperReturn China 2012. The theme was FundRaising for Private Equity Firms. Taking part in the panels were some of the mostsuccessful and respected funds managers and LPs investing in Asia.Those participating in the panels included:Tina Wei of Flag Capital a $4.4bn Fund of Funds that invests $350m paTom Chandos of Esmée Fairbairn Foundation, a £1.3bn grant-makerConrad Tsang of Baring Private Equity Asia who closed a $2.5bn Fund V in 2011Stuart Schonberger of CDH Investments China’s most respected PE firmLucian Wu of Paul Capital, voted PEI Secondaries Firm of the Year in AsiaOthers quoted were also speaking at SuperReturn China.“I hate seeing GPs who thinkfundraising is a waste of time”Tom Chandos, Esmée Fairbairn
  8. 8. benjaminball.comABOUT BENJAMIN BALL ASSOCIATESBenjamin Ball Associates helps financial organisations pitch, present and persuade.Working with senior management, we help people get their messages across persuasivelyand confidently. Our approach assures rapid long lasting results. Based in the UK, wework throughout the world.We add value by advising alternativeinvestment managers how to be moreeffective with their fundraising and investorpresentations.We improve valuations of portfolio companieson exit by helping the management get theirstory across powerfully.We do this by creating powerful investorstories, clear presentation materials andengaging performances in pitch meetings.We are known for our cost effective servicesthat deliver excellent value.Because the team consists of financial andcommunication professionals, you get expertadvice on every aspect of your investmentcommunications.To discuss how we can help you pitch, present and persuade contact:Louise AngusBenjamin Ball Associates1 King Street, London, EC2V 8AU+44 20 7193“The new presentation properlyrepresents the professionalinstitutional quality of our fund”Erwin de Klein, Saemor Capital“the most valuable 3 hours I’vespent with anyone in a long time”Mick May, CEO, Blue Sky“I wouldnt hesitate inrecommending their services.”Gemma Godfrey, Investment CommitteeChairman, Credo Capital“This training has contributeddirectly to new business –including a new FTSE100 clientMichelle Elstein, Head of BusinessDevelopment, Olswang LLP“undoubtedly improved theoutcome and offer we received”Liz Warner, CEO, Betty TV