Romney Spotlight Reveals Trust Gap Between Private Equity & Public

Private equity firms are learning that “private” can be a disadvantage in the era of digital social networks. G7 voters are frustrated by prolonged poor economic performance, falling prosperity and growing income disparities. P/E firms are an all too convenient target, and US presidential candidate Mitt Romney is bringing unwelcome exposure to the industry. There is a strong populist theme to U.S. and European politics, which sets the scene for a prolonged era of criticism, precisely when the industry is struggling, and firms are closing.

Smart P/E firms will be grounded and strategic about building trust among lawmakers, their publics and other stakeholders, and using digital social networks could play a key role in educating stakeholders and interacting with readers with transparency and principles, thereby building trust and dampening criticism. Specifically, P/E firms should:

• Create a robust strategy: understand the real issues and identify “tipping point” stakeholders, their motivations and their preferred venues
• Think through the key areas of ignorance and criticism, and develop empathic (yes, really) ways to serve stakeholders to counter ignorance without being defensive; optimize the ways to serve with firm goals
• Avoid acting too quickly without a strategy, which would probably be perceived as defensive and could make matters worse
• Avoid acting old school, justifying and rationalizing behavior; this would certainly increase the ardor of criticism; this includes minimizing defensiveness in public relations; PR firms often don’t understand the digital social environment
• Prepare to interact with some unruly characters, many of whom will refuse to be mollified; they are not the real audience, which is the more numerous, moderate stakeholders who observe behavior; when they watch firms display honest, even-handed behavior online, that would go a long way in affecting perceptions