Service Provider Brands
Hedge Fund Service Provider Branding & PR
The value placed upon the brand of service providers, hedge funds, and private equity firms has doubled in the past 9 months. This is due to Lehman Brothers, Bear Stearns, Madoff and others. In each of these cases the common thread was the creation of or fault of un-reliable or unstable service providers. Some hedge funds in London had 100% of their assets frozen within Lehman’s custody services, partnered banks and hedge funds fled Bear Stearns as it sank and Madoff’s fund raised half a dozen red flags from in house administration and self clearing to working with a 2 person auditing firm. The result is an effort by many to mitigate counter-party risk and conduct research on those who have been traditionally responsible for providing fund due diligence services. Fund managers are feeling pressure from hedge fund and private equity board members and investors to rely on well known and vetted service providers rather than trying to save 20% in fees by working with a local or lower cost operation.
Protecting the brand of your own hedge fund or private equity fund is more important than ever. Rumors of gating clauses being enacted or redemption requests spiking within a single fund can spread around the world in less than 3 days. False rumors can cause investors to act irrationally and began to question the quality of a fund’s team or operations. As these two industries develop further many funds will continue to expand their use of public relations firms and many funds may need to have public relations plans in place to counter false rumors and be ready to act; this could be just as important to have in place as a disaster recovery system.
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