Public Relations: An Investor Perspective

I am a private equity and angel investor active in a variety of markets, primarily Europe and Asia, and also North America and the Middle East. Forbes Associates asked me to write this guest blog on how good public relations is important to investors anywhere in the world.

 

The simple answer is that proper communications to a variety of stakeholders is crucial to a successful business. And of course public relations expertise is a key piece of effective communications. To illustrate this general point, I offer some practical examples that come up often for me:

 

  • Marketing. Every business sells something, and marketing is usually an important part of the sales process — particularly for consumer products, but also for business-to-business offerings. PR is often the foundation of effective marketing, and can be more cost-effective than advertising for certain types of products. One example is content-based products like music, films and books, for which a popular buzz (usually on the Internet) is much more effective than advertisement. Fashion is another area where buzz can be important (although advertisement plays a bigger role than for content-based products).
  • Fundraising. When I and my partners are seeking to raise money for a business venture, accurate and positive market perceptions are crucial. Financial PR experts are usually an important part of the team on any major fundraising.
  • Event-Driven Reporting. Public companies have an obligation under securities laws to report publicly on various regular and exceptional company events, and these reports are customarily made in or accompanied by a press release. It is important to have a PR team that understands the legal requirements for such disclosures, as well as how markets can be expected to react. Mistakes in this area can have serious regulatory and market consequences.
  • Crisis Management. When a company suffers an unexpected crisis, or, perhaps, reports on a substantial adverse change to its business, public messaging is crucial. Under the strains of a crisis, it can be particularly difficult to report in a way that is accurate and honest, while protecting the company’s interests. And time pressures for reporting can be intense. A seasoned PR expert is highly desirable — some would say necessary — as a member of any crisis-response team.

 

These are just some of the most prominent examples of how public relations can be important to the success of a business and its investors.

 

I will add one further anecdote. One of the London-based private equity firms with which I work often has itself made a substantial investment in a communications and PR company, whose services they often use for their own investments. Clearly, these investors understand the value of PR both as a good industry to invest in and also as a valuable service when done right!

 

Maury Shenk

Solidus Partners [link to http://uk.linkedin.com/in/mauryshenk]