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| Michael Fox (L) and Chuck Dohrenwend co-authored this article. |
Private equity is staring at a perfect storm of challenges: exit opportunities have narrowed, cash distributions to limited partners have dwindled, markets remain volatile and fundraising is difficult. As private equity investment firms face unprecedented pressure from their limited partner investors to generate liquidity from their aging portfolio companies and as the exit market remains very crowded, firms need to consider all tools to best position assets for sale.
Building a strategic public profile for the business well in advance of a sale process—ideally, 12 to 18 months before a desired exit—is an often-overlooked way to enhance business value. Liquidity communications refers to the strategic positioning, visibility and market relationship-building work private equity portfolio companies should undertake to enhance their perceived value among prospective buyers prior to their sale. Put simply, the assets that perform best are the ones that have created demand well in advance of a sale process.
Defining liquidity communications
Liquidity communications is a strategic approach to investor-informed communications and advisory that builds awareness, understanding and relationships to position private equity-backed companies for exit. Its primary objective is to help generate interest and demand well ahead of a planned exit, effectively “conditioning the market” for a future sale.
The premise of liquidity communications is that the desired response to a Confidential Information Memorandum isn’t “wow, this looks like an interesting business,” but rather, “Finally! We’ve been hearing about this company everywhere and are excited to now have the opportunity to invest.”
This approach complements, but precedes, the pre-sale positioning work of the sponsor firms themselves and their financial advisors. It includes not just public relations and visibility components, but also critical relationship-building activities with investors, analysts, market influencers, other private equity firms and potential strategic acquirers.
What distinguishes truly effective liquidity communications is the ability to understand how the investment community thinks and values companies. This investor insight—knowing what drives buyer interest and higher valuations—forms the foundation for developing positioning and executing a program that will resonate with potential acquirers and public market investors.
| This article is featured in O’Dwyer’s Aug. ’25 Financial PR/IR & Professional Services PR Magazine |
How liquidity communications works
Investor insight
The foundation of effective liquidity communications is a deep understanding of how investors think about a particular space or sector and what they’re looking for at a particular window in the market. This investor insight is perhaps the most crucial element of the entire process, as it informs subsequent decisions about positioning and communications strategy.
By leveraging expertise in investor relations, capital markets and investment community interaction, companies can develop a nuanced understanding of what will motivate buyers to pay premium prices. This includes identifying the metrics that matter most to investors in a specific sector, understanding current valuation methodologies, recognizing key industry trends and anticipating potential concerns or objections that might emerge during the diligence process. It’s important to note that this can only be properly developed with deep industry sector knowledge and active market connectivity because the tangible and intangible drivers of value differ from sector to sector, and they evolve across various economic and market cycles.
This investor-informed approach provides the strategic intelligence needed to craft messaging and determine the positioning and visibility initiatives that will most resonate with potential buyers.
Company positioning
Defining and articulating a company’s investment story requires strategic messaging that goes beyond simply telling a traditional corporate or product-focused story. It requires a comprehensive enterprise narrative that speaks directly to investors’ priorities.
Effective positioning ensures that subsequent profile-raising activities are focused not on whatever seems interesting, but on those business variables and characteristics that matter most to potential buyers or investors: the underlying business model, key strategic initiatives, performance metrics, competitive advantages and management expertise, among others. It frames the company’s story in terms that resonate with prospective investors and provides a foundation to address potential concerns before they become obstacles to a premium valuation or the sale transaction itself.
Liquidity communications also provides a process by which the portfolio company’s performance against its growth plan can be judged by investors, helping the company build credibility and trust among prospective future investors. As such, the pre-sale positioning program incorporates multiple touch points for the company with the investment community, so that prospective buyers understand the company’s total addressable market, differentiated mechanisms to scale and grow the business and management’s ability to successfully execute the strategic growth plan over time.
Awareness building
With positioning established, companies must generate strategic visibility and demand through various channels. This includes creating a searchable record of content that reinforces the company’s investment narrative and builds its profile among potential buyers. Tactical elements to support awareness building may include:
- Proactive media relations that’s specifically focused on creating visibility around the key investment characteristics.
- Executive leadership profile building.
- Securing business and industry award recognition for business attributes that align with investor focus.
- Website and LinkedIn company profile enhancements to reflect the investment narrative.
- Creation of new content assets that highlight the company’s unique value proposition.
- Targeted promotion of earned and owned content to reach key decision-makers.
- Speaking engagements at industry and investment conferences and events that will generate visibility with potential buyers.
- Securing analyst coverage reports or participating on private company panels.
The goal is to ensure that prospective buyers become aware of and interested in the company by consistently encountering a compelling narrative that aligns with their investment criteria.
Relationship building
Liquidity communications should also focus on building direct relationships with key stakeholders who influence exit outcomes. This includes nurturing strong working relationships with analysts, participating in private-company-track panels, meeting with relevant institutional investors, attending industry networking events and developing strategic relationships with journalists and other media influencers.
These relationship-building activities are particularly important in today’s market, where investors are more deliberate and follow an extended diligence timeline before making investment decisions, typically wanting to meet 3-6 times with company management before making an investment decision. These interactions provide opportunities for companies to demonstrate that their business model works and build credibility within the investment community by consistently delivering on predictions and expectations.
Deal communication
Ultimately, deal communication is an important step in the liquidity communications process because it serves as both a value preservation and value demonstration tool to highlight the value created to ensure that all parties recognize the achievements and improvements made. Positioning the announcement in alignment with the overall fund strategy provides concrete proof points of value creation expertise and a track record of success, both of which are key to raising funds from future investors. But ultimately, the preceding period of a focused and strategic liquidity communication program, informed by sector-centric investor insight, is what will allow for the most successful deal announcement.
Liquidity communications has become an essential tool for private equity firms and their portfolio companies seeking to increase asset values. The unprecedented exit backlog, extended hold periods and fundraising challenges facing private equity make pre-exit positioning more important than ever before.
Those that invest in comprehensive liquidity communications strategies will be better positioned to stand out in a crowded marketplace, attract premium valuations and achieve successful exits even in challenging conditions.
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Michael Fox is Chief Client Officer at ICR. Chuck Dohrenwend is Managing Director at ICR.
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