What is the one secret tool that syndicators and private equity fund managers use to keep their investors happy and keep them reinvesting? It’s got one word, it starts with the letter C, and we’re going to talk about it next.

That one word is communication. Communication makes all the difference. You want to keep yourself safe as a syndicator or private equity sponsor. Investors will go a long way with you as long as you’re doing one thing, and that’s talking to them. Let them know what’s going on on a frequent basis, so there are no questions. They like to know what their money is doing. And if they don’t want to know, they don’t have to read an email or answer the phone.

Let’s go through the eight tips of communication, or what we call investor relations, that I often give my clients and you are free to use as well:

  1. Fairly present both positive and negative aspects. It may seem tempting to only focus on the successes of the syndication, but don’t do that. Make sure to have it be fair and focus on the facts. Present everything balanced about successes and challenges you’re facing. For example, if you’re doing a real estate syndication and a vacancy is coming up, talk about it. It’s very important that investors know it’s there, and it helps them know you’re always telling them the truth and telling both sides.
  2. Update regularly and keep communication channels open. I think it’s very important to communicate every quarter. Some people communicate every month, but I believe that’s a little bit too much. Every quarter is very reasonable; once a year is permissible under the rules, but it’s not enough. Your investors will not know what’s going on and they’ll start to worry. Keep those channels open as well. Even in quarters where you have mixed results, maintain that open communication with your investors. Invite them to call you and have an open dialogue. It might make sense to do a webinar once a year where everybody can come in and talk about things. This reassures them that you’re effectively managing their money in your syndication or fund.
  3. Be adaptable. The things you present to investors should evolve over time to reflect the actual health of your syndication and help investors track their own progress.
  4. Quality communications is key. Make sure your updates and communications are planned and effective and show that you’re a professional. If you’re doing a webinar, be well prepared. Practice that presentation and ensure your team is ready to answer any potential follow-up questions.
  5. Give understandable metrics. This helps investors understand their position at any given stage.
  6. Diversify the representation that shows up in the communications. Highlight somebody from your leadership team other than yourself. Make sure it’s well-rounded. When you’re planning this marketing, occasionally include those other people because it gives investors a broader perspective about what’s going on and a sense that there’s more happening than just running a property.
  7. Be proactive in responding. When you have bad news, it’s very important that you quickly assess its impact and communicate it to investors proactively.
  8. Provide clear guidance. Successful syndicators understand that transparency is key to getting and keeping investors happy. Always strive to offer guidance to your investors about what whatever’s going on means.

For example, during COVID, I had a property that I was syndicating. The first thing we did was send out an email as soon as lockdowns occurred. We didn’t know what was happening, but we talked about the ramifications for investors if rent payments stopped coming in, what the law was quickly evolving to be, and whether there was a moratorium on the rent we were receiving. It was very important for investors to know that we didn’t have all the answers, but we could draw conclusions from what we did know. We could say, “This is what we think we would do in these types of situations.” That’s the kind of guidance and “captain at the helm” approach that investors expect from you.

My name is Tilden Moschetti. I hope these tips were helpful. Again, the most important thing you can do is communicate, communicate, communicate with your investors. Make them understand that you know what you’re doing and their money is in safe hands.