Kevin Dowd October 13, 2016
A private equity firm could decide to call itself “The League of Extraordinary Software Investors.” It could call itself “Canadian Gladiators” or “The Galactic Confederation of the Crab Nebula and Adjacent Sectors.” It could probably call itself “The Beatles,” if the founders weren't scared of a little legal action.
But for whatever reason, PE nomenclature is not so flexible. Despite the infinite possibilities presented by the ever-so-flexible English language, when it comes to deciding what to call their creations, new firms consistently draw from a very small linguistic pool. Everyone returns to the same themes: the names of its founders, a nod to location, some vaguely peaceful phrase like “Vista” or “New Mountain.” Tack “Group” or “Capital Partners” on the end and call it a day.
Just how prevalent are these naming motifs? To provide a somewhat scientific answer, we looked at a list of the 169 private equity investors based in the US that have completed five or more deals so far in 2016, as tracked in the PitchBook Platform, and classified the suffixes used in each firm name (essentially the last word or last couple words, depending). Here are the results:
The “Partners” suffix leads the way with 35 instances (21%). Combining the “Capital,” “Partners” and “Capital Partners” categories accounts for 88 of the firms on our list, more than half—a significant percentage for such inflexible options. Adding in “Equity” and “Equity Partners,” which are really minor variations on the “Capital” and “Capital Partners” theme, brings us to an even 100, making up about 60% of the busiest PE firms in America.
One reason for this is a lack of originality. But another is surely a desire to fit in. A new firm wants to be taken seriously by investors as quickly as possible, and one way to play catch-up with more-established competitors is to choose a name that makes yourself nearly indistinguishable from them. In that regard, “The League of Extraordinary Software Investors” probably wouldn’t fly.
What’s the point of all this? There isn’t much of one. But if you’re an investor on the verge of branching out and starting your own firm, consider it a plea to inject a little bit more creativity in the naming process.