Making The Grade: Who Represents Your Firm?
A client of ours was recently acknowledged as one of the “Top 10 Most Trusted Firms by Intermediaries in the Middle Market.” This industry award was particularly noteworthy because it was voted on by the firm’s peers. The accolade sparked a conversation within Sixpoint about our role within the fundraising ecosystem and, more specifically, how we would be evaluated or assessed by GPs and other counterparties within the private equity community if they were asked about placement agents. Fundraising lends itself so naturally to the intense scrutiny of GPs that it becomes easy to forget to direct that magnifying lens back towards yourself. In the spirit of this self-reflection we asked ourselves a simple question: how should placement agents be evaluated? Industry standards would suggest that tombstones and aggregate fundraising dollars are the best means of evaluation and we agree that they are an important series of metrics. However, beyond the headline numbers, there is also something very important that placement agents are entrusted with that gets far less attention: brand management.
We view the placement agent world as being of two distinct camps; agents and advisors. Agents are those firms – or individuals – that possess a rolodex of contacts at a broad section of the LP community from which they can make introductions to GPs for a commission. Then, there are those that serve as advisors to their clients. Advisors not only act as agents, but also stewards of the GP’s brand, working with clients to position their firm in the market over multiple cycles and providing the best advice and solutions to clients over everything else – even the advisor’s own short-term economic interests. Providing the proper advice is not always easy or welcome. In fact, we frequently describe that it can feel like going to the doctor. The doctor will tell you what you need to hear and not always what you want to hear. In dealing with brand management, sensitive topics such as capacity allocation, carry distribution, management structure, succession planning, business expansion, pitch demeanor, and LP communication arise and are often difficult to address. It is therefore critical that you diligence your advisor’s approach to ensure that it aligns with your long-term vision not just for fundraising but your business more broadly. Equally important, is to remain self-critical and open to constant course correction and improvement because fundraising and brand management are, at times, iterative processes.
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Sixpoint Partners, LLC, is a registered broker/dealer, member FINRA (http://www.finra.org) and SIPC (http://www.sipc.org).