In 2023, we wrote an article titled “Both Sword and Shield,” discussing how Private Capital firms – spanning Private Equity, Venture Capital, Asset Management and beyond – were becoming household and more recognized names due to the trillions of dollars they invest, their influence and the impact they can make on major issues, ranging from sustainability to human rights to responsible investing. We noted the intensified spotlight this was placing on these firms and the need for them to invest in bringing in skilled communications and corporate affairs leadership and teams to act as both a shield (providing risk mitigation) and sword (driving competitive advantage).
2025 has done little to dampen the need for this investment – in fact, it has made it even more of an imperative. The seismic shifts in politics in the United States and beyond, and the accelerated decoupling and fracturing of traditional trade and geopolitical norms has intensified the real necessity for Private Capital funds to be properly armed to understand, engage and navigate the forces around them. This is vital to anticipating the new range of possible futures they face – at fund at portfolio level - investing in contingency and hedging options and being considerably broader in the range of risks they consider.
We have seen this with a renewed investing in senior, experienced corporate affairs talent at fund and portfolio level, with a particular focus on building capability around public and external affairs engagement alongside strategic communications.
By popular demand, we’ve updated our 2023 article to reflect the changes we are seeing and the implications for the sector.
Time for a bigger shield – Corporate Affairs as your much-needed risk management tool
Corporate affairs and communications teams can help firms navigate risk and stakeholder engagement in a complex and changing environment. In 2023, we saw that Private Capital firms had become more entangled in controversial social, environmental and culture debates – sometimes intentionally and many times not. At the time, this highlighted the need to align their messages with actions and ensure the decision to enter the fray is measured, intentional and made with awareness of the potential risks and ways to mitigate them. Back then, The Financial Times noted that “Wall Street’s largest asset managers, private equity firms and brokers have warned that a backlash against sustainable investing is now a material risk, in filings that show how acrimony over ESG principles has become a perceived threat to profits.” However, even those with foresight were unlikely to predict the speed of change we have seen recently or the complexity that investors now face. There is significant divergence emerging between the United States, Europe and elsewhere across a spectrum of topics, and potentially punitive financial, legal and reputational risks from making “missteps” around these topics – either historically or in the future. Getting a read on where geopolitical, social issues and key stakeholders might leap in the future – tomorrow or longer-term – is more challenging than ever but even more important to staying ahead, if not falling behind. As events this year have shown, the firms that have been quicker to read political shifts, assess the impact on their portfolio and then effectively communicate to their investors what this means are coming out strongly and building their brands – even if the news is not positive, investors are appreciating firms who are engaging with them in depth and able to bring a differentiated insights and perspective that informs their next play.
What has changed materially since 2023 is the realization that the scope and speed of change in the social, regulatory and political environment has increased, the ambiguity is greater and traditional planning or forecasting to manage risk has become even more difficult – far-off risks are crystalizing on what feels like a daily basis. What has not changed is that getting the message and stakeholder engagement wrong has real-world, real-money consequences. Having the insight and capacity to be agile to these risks is vital.
A sharper sword – Communications remains important to keeping competitive advantage
Competition remains intense in the Private Capital arena – from attracting investors to convincing the CEO or Founder of “the next big thing” start-up that you are the partner they want to grow their business with. Being part of the right conversations, maintaining a strong reputation and brand, and effectively telling the firm's story are crucial for winning over stakeholders. It is now more widely recognized that a well-crafted narrative that considers investors, investment stakeholders and the broader community, along with a solid business case, can make the difference in getting to the handshake. What is emerging more recently is the importance of firms ensuring that their story remains true and consistent, even when conditions around them change to avoid being perceived as insincere or opportunistic. Making a pivot or change once might be forgiven or understood, but constant change in your narrative, position or story to broader stakeholders will, in the long-term undermine credibility and trust – internally and well and externally.
Despite what has changed, deals still need to pass muster in the court of public approval and opinion—and potentially with regulators and elected officials who are perhaps even more attuned to the change in public and political sentiment. Having the needed advice and approach to foresee and navigate this risk remains crucial to turning that handshake into an executed deal.
Leading firms are seeing the value…and those that haven’t are quickly waking up
In the last two years, Private Capital firms have realized that they will be regular flashpoints in the broader public conversation. Many have now recognized the need to proactively navigate this new environment and are investing in leaders who can help them understand public sentiment and ensure their voice is heard by key stakeholders. The events of early 2025 have been a wake-up call for firms that had not yet prepared for this spotlight and had viewed their communications teams in a limited functional sense. They are now seeking real partnership and guidance in an increasingly complex setting.
Translated into practice, we have seen several leading firms across the private capital space make significant strategic investments in their communications and corporate affairs capabilities. The biggest focus, most recently, has been in the area of public and external affairs – bolstering their existing research and government affairs teams as well as creating “taskforce” style teams that bring these teams and their communications teams together even more closely. Not unsurprisingly, U.S. firms have led the way, with European and Asia-focused firms reconsidering their approach—pivoting from a more traditional focus on supporting their portfolio companies to creating an integrated approach of building the reputation of their firm in parallel. This investment has been made by appointing senior experienced corporate affairs and communications leaders. Additionally, efforts have been made to upskill and build the capabilities of the teams responsible for communications, government affairs, advocacy, and stakeholder engagement. This includes, in part, decreasing their reliance on, and making better use of, external agencies. They continue to look to expand the remit of those teams, integrating marketing and other responsibilities to ensure a joined-up narrative to the market and to give guidance and comfort to investors looking for insight and answers.
Firms should continue to be thinking broadly when it comes to finding and developing talent
Just as Private Capital has seen new risks and opportunities, there has been recognition that just looking within the sector is not the solution. We have seen continued openness to look more broadly for the talent to fill these new roles. Instead of hiring from within or from other private equity or similar firms as was the traditional path, we are increasingly involved in bringing in talent that is new to the Private Capital space. We continue to see a demand for corporate affairs and communications leaders who have broad experience in listed/public companies, who have managed high-scrutiny stakeholders and who might be new to the world of Private Capital but have great exposure across industries and an understanding of complex regulatory and reputational risks. What is attractive is their ability to bring new and creative ways of creating cut-through engagement strategies. Alongside competitive compensation, what is drawing this new pool talent to Private Capital is the dynamic nature of this sector and the sense that this is increasingly where the action is taking place.
While Private Capital firms are looking more broadly for top talent, there remain particular characteristics that leaders need to thrive in this sector—a combination of strategic insight and a very strong results orientation, high levels of resilience and agility, and an entrepreneurial spirit. The importance and ability to be able to effectively influence in non-corporate structures and work collaboratively, to succeed in this culture, cannot be understated—many PE funds are partnerships and operate under a more founder-led or consensus-driven culture. Outside of the investment committee meetings, there has been a tendency in many organizations to be naturally risk averse, so while fund communications leaders are tasked with innovating the brand and communications, they are often faced with a preference for a low-key, under-the-radar approach. Where we are seeing communication and corporate affairs leaders have the most impact in funds is where they are demonstrating the currency and depth of their insights that are helping the organization adeptly navigate the rapidly changing context—positioning themselves as a “safe pair of hands” who remain calm in times of turbulence is key.
Invited to the party but not always at the top table…yet
While funds are seeing the need for communications leaders, and the leading firms have started to embrace this, communications leaders are still pushing for their seat at the table in this sector. They have been invited in, but they remain under-represented in the ranks of partners and in senior levels of the firm and remain under-represented in Executive Committees (or equivalent leadership teams) compared to their peers in other sectors. Although their elevation into the partner or MD ranks might be still some time off, the firms that recognize the value of having a strong communications and corporate affairs leader will be better positioned to capitalize on the opportunities that lie ahead.
A decision to make
Private Capital firms are, without doubt, major players in the global economy and, even if many still prefer to stay in the background, what the start of 2025 has shown is it has never been more important that they know how to understand, navigate and engage with an increasingly complex, ambiguous and non-linear stakeholder, regulatory and geopolitical environment. And it doesn’t look like it is going to get easier. With this in mind, Private Capital funds should be asking themselves this question: Without the right communications and corporate affairs leadership, team and strategy, are we ready to respond and are we in a position to win - not just today and tomorrow but in the longer-term, where there are many possible futures to anticipate, and when the winds will likely change again?”
