Private equity as an industry has been slow to embrace digital transformations. On the surface this makes sense: most transformation discussions focus on customer experience and e-commerce, whereas private equity businesses are built on relationships and analysis. Yet this attribute is precisely why private equity firms should accelerate their transformation, not delay it. If analyzing relationships is part of what makes a firm successful, the industry should leverage technology to generate actionable insights.


Every company sits on a mountain of data. Unfortunately, in most private equity firms, interactions and analysis take place in different systems, so there is no complete view of investors or investments. By transforming their technology to integrate this data, companies can achieve more-efficient workflows, generate powerful insights and deliver enhanced investor experiences. Those that enable their business to mine data for their unique needs will build a competitive edge. In fact, 43% of companies with advanced digital maturity report significantly higher net profit margins compared to the industry average.


Overcoming the challenge to commoditize data

Historically, privacy concerns and complex analysis models have forced private equity to rely heavily on spreadsheets. Although familiar, this had led to redundancies, lost opportunities, and a disjointed experience for everyone – from deal marketing and investor communications to investment documentation. This is a threat to the very future of the business, as important data is distributed on multiple, isolated sources, making it difficult to mine for valuable insights.


How can private equity firms use digital technology to commoditize this data? By focusing on the data surrounding those interactions that lead to a commitment, and by ensuring that all data is used in the investment research/capital call process.


Focus on interactions that lead to a commitment


Investor interactions contain valuable data that can play an important role in improving investor participation. In addition, the strength of a private equity firm’s analysis, or its due diligence of potential investments, can determine the firm’s success. There is an abundance of useful information surrounding investor communications in private equity. However, much of this data is trapped in emails or other systems, making it difficult to analyze.


The first step in the transformation journey is bringing investor engagements into a CRM like Salesforce. Collect and aggregate data points about investors – their interests, preferences for commitment and investment periods, and any other factors that impact their decision making – and overlay it with the size and frequency of their commitments. This provides a 360-degree view of the investors interacting with the firm, enabling the company to take a more-targeted approach in the capital call process. Capturing communications with investors, both individuals and funds, in one portal will lead to better decision-making, better investment options, and a superior investor experience. Integrating investor data with available investments and automated regulations creates better alignment of performance goals with investors’ interests and preferences.


Capitalize on capital call research data

A capital call process is key for private equity firms. Amid abundant competition, firms must demonstrate consistent speed and accuracy to remain competitive. Using a robust digital process that uniformly captures data to seamlessly connect with investors can provide powerful insights in the investment review.


Consider the a typical review of capital investment opportunity requests: 75% don’t make it past prioritization, another 22% won’t make it past discussion of the investment committee, and 2% won’t progress to completion. Routinely, fund managers focus on the approved investments which makes sense as it’s where the capital is being deployed. The initial screening where 75% of opportunities are removed is where most fund managers have a robust process. The key is capturing the qualities of investments that don’t make it past the investment committee review or progress to completion. The valuable data collected in this process can:

  1. Improve and expedite the screening process.
  2. Increase focused research on data that lead to more informed decisions.
  3. Reduced non-qualifying investments give the firm back more time and trims costs associated with investment review.


Examining possible investments generates a lot of valuable data about investments made and not made. The ability to analyze and gain more understanding from these large, complex data sets brings speed and agility to the due-diligence process. The use of analytics and automated business intelligence is just beginning to play a major role in the capital call process. In fact, 91% of private equity firms responding to an Intertrust survey said they believed Artificial Intelligence (AI) would disrupt their sector within five years.


Automation for the capital call solution should provide full transparency across the business, providing a single source of truth. Business trust in data increases significantly when they’re able to see a 360-degree view of the entire process in a single system. Integrating received payments with automatic histories of each investor will deliver a complete view of the investor enabling customized interactions that drive better results.


The urgent need for private equity transformation

Now is the time for the private equity industry to embrace transformation. During the next 25 years, $68 trillion in wealth will transfer from the Baby Boomer generation to Gen Xers and Millennials. These generations demand more information, have different risk preferences, and expect customized user experiences. Private equity firms will need to adapt to these generational differences – including reimagining and reinventing their underlying technologies – if they expect to have access to this wave of capital.


Embracing a data-centric digital transformation and utilizing smart tools will enable private equity firms to leverage their data for a competitive edge. Commoditizing this data will enhance collaboration within internal teams and with investors, while powerful analytics provide the transparency and insights that they need to future-proof their business.

Joshua Ault

Joshua Ault

Portfolio Partner – Capital Markets

Josh is responsible for Capital Markets at Appirio and has over 15+ years of experience in designing, developing, and implementing scalable, reliable, and secure architecture for enterprise customers. He is a senior leader skilled in building effective teams capable of executing scalable and predictable front and middle office processes that result in revenue expansion and service excellence. His capability to straddle both Strategy and core execution uniquely positions him to ensure his clients' success in the CRM space.

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