Category: Deal & Pipeline Management

In the wake of the COVID-19 pandemic, it seems that many companies will continue to work remotely indefinitely, if not permanently. This poses a new challenge for capital market deal teams as they attempt to perform due diligence on companies they can’t visit. A process that used to involve multiple in-person meetings will now have few or none.

How will firms adapt to this change? It’s clear that they’ll have to rely more heavily on private equity technology. However, before implementing new tools or expanding your use of existing ones, it’s important that you prepare your firm for this new approach. In particular, it’s critical that you have a carefully crafted due diligence process that your deal team knows well and is comfortable with. The last thing you want to do is wrestle with making a somewhat arbitrary physical process work in a new, more virtual format.

Key Virtual Due Diligence Tools and Processes

As you look to “go virtual” with your due diligence processes, the first tool to acquire and master is a reliable video conferencing system. And it’s important not just to identify and implement it, but also to take some time to learn how to use it effectively. Online interactions can be somewhat awkward to begin with. You don’t want to compound the problem by being unfamiliar with how to share your screen, give another participant the ability to share theirs, etc.

It’s also vital that you have a fast and effective way to track interactions that you are having with the prospective operating company. This is especially important today since deal team members working remotely won’t have the luxury of sitting down with you in person to talk about your notes. When tracking interactions, it’s vital to link or “relate” records—contacts, deals, fundraises, etc.— to one another to create helpful context for other users at the firm.

Third-party apps are also likely to become a more important component of your “technology stack” as you move to virtual due diligence. Tools like SourceScrub, SalesLoft, LinkedIn Sales Navigator, and DataFox track and send operating companies and investor updates directly to your CRM, saving you time and help ensure accuracy. That is, of course, if your CRM has integration capabilities.

And finally, having a secure virtual data room and engagement platform like ShareSecure is absolutely essential in the due diligence “new normal.” Using an approach like simply sharing Google docs may be efficient for another industry, but due to lack of security for capital markets, is discouraged. Instead, deal teams should use an industry-specific tool that enables the safe sharing of a wide variety of file types. A purpose-built private equity platform provides many added benefits, like empowering team members to see who has viewed each document made available through the system and allowing remote document signing.

Take Decisive Action to Enable Effective Virtual Due Diligence

Firms and deal teams that try to “duct tape” their existing due diligence processes and make them work until the business world “gets back to normal” will be in trouble if it never does. On the other hand, private equity firms that embrace virtual due diligence and equip themselves to conduct it effectively will have a distinct competitive advantage.

Some degree of in-person—if socially distanced— due diligence interaction is likely to return at some point. But it’s better to assume that physical meetings will be few and far between, and prepare your firm to move forward accordingly.

If your capital markets deal team is looking for a way to better manage processes, download our free guide below Winning Deals in a Hyper-Competitive Market.

In Private Equity, the quality of your interactions, or meeting notes with investors, is one of the most critical factors in whether they choose to invest. And because multiple individuals and teams throughout your organization will likely play a role in securing the investment, everyone must be able to quickly retrieve and review the content of any interaction or note at any time from a single source of truth.

This means that your customer relationship management (CRM) system must-have functionality for recording and managing interactions effectively. Specifically, the system should enable you to:

• Track communications efficiently. What was communicated? From and to whom? When, why, and in what medium (email, phone call, in-person meeting, etc.)?
• Relate or link interactions to multiple records. One interaction may be associated with or influence several contracts, deals, co-invests, fundraises, or investor records for potential limited partners. And if the investor you’re currently communicating with is linked to multiple funds or portfolio companies, you want to know.
• Provide transparency. Often, heads of Investor Relations or Deal Teams will ask about deal sourcing or outbound call activity, even coverage across intermediaries or LPs, and interactions help you answer those questions. They are also an essential source of information in the area of compliance.
• Manage relationships effectively. Interactions help you improve the way you nurture relationships, and ultimately raise and deploy more capital.

Without purpose-built private equity technology that includes these capabilities, you risk losing potential investors to firms that do a better job of developing a strong connection with them.

One Measure of the Importance of Interactions: 5.3 Million Entries and Climbing

At Altvia, we are, as you would expect, a data-centric company, and we track data trends very closely. One measure of the importance of interactions is that across all of the clients that use our private equity CRM, the number of interactions entered is over 5.3 million and climbing rapidly. In fact, the system’s interaction tracking capability is one of its most highly leveraged features.

6 Best Practices for Managing Interactions

When using an interactions feature, there are six best practices that we’ve identified that allow users to maximize the benefit of that functionality. They are:

1. Have all users make entries in the system. Clients will sometimes ask us if it’s better to have one administrative person or a few people tasked with recording interactions based on information provided by other users. We’ve found that that approach can create a logjam that prevents entries from being added promptly. Plus, having each user make their own entries encourages them to check out and leverage the information that’s already in the system.

2. Use descriptive subjects. It’s easy to give an interaction a one-word subject like “Meeting” or “Call.” However, it’s not particularly helpful to someone who is browsing through subject lines to have dozens or hundreds of meetings logged. Users get much more out of the system when the subjects are detailed.

3. Enter detailed notes. As with subjects, the more detailed the notes for an interaction are, the more benefit other users get from the entry. It’s a good idea to reread an entry you’ve just written as if you are someone with no knowledge of the interaction to see if you can make sense of it. Detailed notes are also important for transparency around what has taken place.

4. Develop a standard process. What types of information should be entered as interactions and at what point? For example, should every email be logged, or is it better to wait until an email conversation has run its course and log the entire thread? Reaching a consensus among stakeholders at your firm and then educating all users on the process you come up with is very helpful. See our image below for an example how your firm can create an interactions process.

5. Use the cascade feature. An interactions feature should have automation that simplifies the process of making entries. You should leverage that automation whenever you can.

6. Ensure that you are entering meaningful interactions. While you want to capture important information, recording absolutely every time you connect with an investor or other stakeholder can create unwanted “noise” in your system. Every interaction may be a candidate for entry, but then you need to focus on recording only information that will help with decision making and next steps.

Experience Interaction Management for Yourself

The best way to understand the value of the interactions feature in Altvia is to see it in action. Learn why top tier firms turn to Altvia for their private equity technology and improve the efficiency of your processes with an industry-specific platform. Request a demo today or see how firms like yours partner with Altvia.

From the first close to the final close, investment deals have many moving parts. From fundraising to due diligence to portfolio management, deal teams have to stay on top of all of the relevant details in a fast-paced environment… especially quarterly reporting.

Data drives the decisions and the Private Equity firm that can share relevant insights quickly is rewarded with a solid reputation in a competitive marketplace.

Any fund manager will tell you, putting together the quarterly reports for Limited Partners takes up far too much time. Thankfully, today’s software can help your deal team streamline the process of collecting, evaluating and sharing the necessary data that can make or break an investment deal.

Below, we outline the three key areas fund managers should focus on to improve the efficiency of producing quarterly reports to help support future business success.

1. Commit to Clean Data

What’s worse than having no data at all? Having bad data that makes your deal team look bad. From duplicate data that results in multiple reports sent to investors to inaccurate data that overlooks a key decision-maker, the key to efficiency is using clean information to build your reports.

The first step? House all of your data in a central place where everyone on your team can access, organize, and analyze the information they need, whenever they need it. Next, connect your data repository to trusted, real-time data sources from the cloud, so the information in your quarterly reports is the most accurate and up to date.

With a single source of data to pull insights from, you can customize your platform’s tracking preferences by preferred stage, investment type, and asset class to access the details you need quickly and easily, no matter what stage of the deal you’re in.

How Tech Can Help

AIM, Altvia’s Private Equity CRM solution—integrated with the Salesforce CRM platform—helps your team:

• Manage every piece of information you have on a potential investment
• Store detailed notes on calls, meetings, and emails from all stakeholders
• Ensure compliance with an organized process for auditors and investors

2. Take Advantage of Data Visualization

Today, meaningful data is the name of the game. Whether it’s the details that paint the bigger picture or timely information, backed by reputable market sources–these are what drive new business opportunities.

Gone are the days when LPs would be impressed by a static performance report. Today LPs are looking for information they can absorb easily—and act on quickly. Visual representations of data help decision-makers see and understand the trends, outliers, and patterns from massive amounts of information at a glance.

What’s more, interactive dashboards give your deal team instant access to relevant information, empowering them to understand insights on their own. As a result, the quarterly reporting process becomes more transparent and increases accountability for all of the involved stakeholders.

How Tech Can Help

AIM, Altvia’s Private Equity CRM solution, helps your team:

• Build customized reports and dynamic dashboards to visualize data
• Gain unparalleled insight into your deal flow sources and valuation trends
• Use easy-to-configure dashboards to derive meaningful insights

3. Built-In Secure Sharing

When investor relationships are strong, fundraising runs more smoothly. One way to maintain those important relationships is by ensuring the process is simple, secure, and transparent.

Today, instead of back-and-forth emails or phone calls, LPs expect to access a virtual data room where they can find the information they need, exactly when they need it. In addition to convenience, LPs expect secure, time-saving portals with the latest protocols in place, such as TLS/SSL & AES-256 data encryption and two-factor password authentication.

How Tech Can Help

Altvia’s ShareSecure LP Portal helps your team:

• Protect sensitive documents with Enterprise-grade security
• Customize user permissions to control access to documents by the deadline
• Request, capture and track digital signatures to complete milestones

Private Equity firms can make their quarterly reporting more efficient by adopting repeatable processes that align key business goals with expected reporting milestones. Software designed just for Private Equity firms can automate these processes and offer time-saving tools that improve data accuracy, quality, and security. With greater operational efficiency, fund managers can focus on maintaining their competitive advantage by establishing a reputation for delivering more powerful insights.

To learn more about how Altvia can improve your quarterly reporting process, view our technology buyers guide below.

What’s Driving the Need for Better Access to Data?

In recent years, easy access to insightful data has gone from being a luxury to being a necessity, especially in the due diligence process. Why?

Here are some of the main reasons:

• The need for data is growing. 

Most organizations and managers are aware that more than ever before, data is the tool they need to solve the problems they face. As Forbes points out in an article about sourcing more private equity deals, “Like the latter stages of a gold rush, investors have to get smarter about where and how to dig.” Consequently, firms are handling more data. However, if access to that data isn’t simplified, they may be trading one problem (lack of data) for another (poor use of an overwhelming volume of data).

• Easy access is achievable.

Knowing that data and technology solutions like Altvia Answers make working with data easy, less prone to errors and virtually painless, users have grown to expect the convenience. Real-time data access in three clicks, as opposed to three weeks, allows firms a greater ability to focus on finding new investment opportunities and prospects.

• Business intelligence and analytics solutions are powerful differentiators.

Not only must firms today be able to leverage analytics to answer client questions, but they also need to empower people to find answers on their own. When customers, investors or constituents are given self-service capabilities, everyone wins.

General Benefits of Improved Data in the due diligence process

Better access to data delivers many general benefits. For example, it helps you formulate a data strategy. It also leads to the development of processes for simplifying analytics. This may include establishing a connection to data sources, defining steps for preparing data for analysis and determining how analyses will be performed and how data will be consumed.

In addition, streamlined access to high-quality data can set your firm apart from the competition, as word spreads quickly regarding the outcomes you are able to achieve.

How Better Data Access Gives Deal Teams a Competitive Edge

In addition to the general benefits that result from better data access, there are a number of advantages specific to deal teams as they are conducting due diligence or executing transactions. They include:

• Enhanced ability to transform data into information that provides accurate, real-time intelligence about clients, partners and competitors
• Expanded capability for performing complex analyses quickly and efficiently, 24/7/365
• Simplified contact and data management
• Streamlined processes that decrease the risk of errors and of being outmaneuvered by competitors
• Increased transparency around intelligence research, financial strategies, deals and assessments

In short, deal teams with better data access have a competitive edge that is more critical every day in an increasingly competitive industry.

To learn more about the importance of data to deal teams, read our guide on Data & Technology for Private Equity Firms.