No one wants to spend their days doing mundane, repetitive, or standard functions, and executives are no exception. The desire to move from the routine to the strategic is never more obvious than when looking at private equity CFOs’ priorities for the future.
In an E&Y Global Private Equity survey, this shift was dissected and the three areas where CFOs want to be more strategic are:
When talking with our client partners and prospects about how they can best use our products and tools, including to improve the investor experience, their desire to spend more time on value-add activities is clear. So is their focus on being innovative in their operations.
That’s why we provide pre-built dashboards, data-rich integrations, and advanced products that help the deal team and investor relations professionals at top private capital firms manage their relationships with portfolio companies and investors more effectively. It’s increasingly imperative to be strategic and differentiate your firm to command the capital with each subsequent fundraise.
At Altvia, we’re continually focused on improving the investor experience. In fact, in the last few years, enhancements to our products have helped to redefine the relationship between GPs and LPs and, in the process, create a richer, more valuable investor experience.
Since the early days of the Altvia AIM product, our team has purposefully built the features that firms need to manage their relationships, contacts, and data in a way that enables them to win more deals. We’ve observed that tools focused solely on internal efficiencies—and that don’t address the investor experience—ignore the forward-looking, next-generation expectations of those strategic CFOs and demanding LPs.
Our solutions leverage data to:
These are three of the many ways we’re focused specifically on the space between firms and investors. In short, we develop products built specifically for the private capital markets and designed to unleash the power of your relationships and data.
Our drive to improve the investor experience frequently results in updates to our solutions. The latest version of Correspond—Investor Edition is a prime example. Built with your investors in mind, this solution, with its document-sharing and investor-communication capabilities, reduces the time to reconcile systems and is easier to use and faster to manage than ever before.
It empowers firms to bridge the gaps between back office, front office, and investors with features for managing the entire investor lifecycle from fundraising to investor reporting. And always, of course, with an emphasis on producing a positive investor experience.
Our industry-leading fundraising and LP portal solution, ShareSecure, was also developed and is regularly updated to create frictionless interactions and an unrivaled investor experience. Documents sent via Correspond have a natural home in this GP-LP engagement portal. And with investors demanding more and more performance information, it’s essential that top-tier firms have a secure, enterprise solution to support fundraising and management efforts.
ShareSecure helps firms cut through the noise and move beyond the ineffective and incomplete feature sets of other portals with a comprehensive, branded, and sleek investor interaction platform.
The major enhancements we make to Correspond and ShareSecure come alongside the biweekly advancements we implement on the Altvia product suite—things like updating the CRM platform, connecting to next-generation BI tools, and evolving our integrations.
We’re excited about these developments and look forward to driving more innovation in the investor experience in the year ahead.
Recently, we had the opportunity to sit down with nine individuals who are the heads of investor relations for major general partners. We asked what was at the top of their list in terms of operational challenges. Across the board, the most commonly mentioned issue was lack of limited partners engagement.
What can investor relations teams do to increase LP engagement? Our recommendations focus on four areas:
We explain these recommendations below.
1. Develop and follow an outreach plan. It’s vital that you have a strategy for when and what you email to LPs. At a minimum, your plan should indicate what the next few weeks will look like—who you’re contacting, what the focus of the outreach is, etc. Many types of information that create awareness of your firm can be used: New investments, new fund closings, employee spotlights, and thought leadership from partners are just some of the options. If you’re unsure about cadence and content, there’s nothing wrong with asking your audience. Conduct a quick survey using a free tool like Google Survey or Survey Monkey to get their input.
2. Start sharing information using videos. It’s well known that the human attention span is getting shorter all the time. And with many people working from home today—and dealing with countless distractions in many cases—it’s harder than ever for people to absorb and comprehend what they’re reading. Taking the best of your emails and expanding on their content in videos or audio files makes it much easier for people to digest the information you’re providing. You can also drive them to your secure LP portal for more details. (See below.)
3. Provide access to a secure LP portal. LPs want to know that their interactions with you and the content you provide are safe. A portal like ShareSecure has enterprise-grade security that can give them peace of mind as they check out resources you make available. Plus, you can track who has opened and viewed media files or signed documents.
4. Assess engagement to guide further outreach. With a tool like Correspond Market Edition or Correspond Investor Edition, you can gain insight on things like the recipient’s last activity and last open, as well as what content they’ve engaged with. This functionality is helpful for fundraising teams who might, for example, see that someone has opened an email several times but has not reached out—an indicator that they may just need a phone call and a little more information in order to get involved. Noting which email subject lines, days of the week, times of day, etc., are most likely to result in an email being opened is helpful as well.
Using Correspond, you can also pull a report on people who never open emails so that you can connect with them on the phone to ask what their preferred contact method is and note that in your customer relationship management (CRM) system. Altvia’s AIM CRM has a field for that purpose, which helps ensure you’re reaching out to people in a way that they’ll be receptive to. You may learn in your call that the recipient simply needs some assistance with how to manage their email correspondence from you, and a little customer service can do a lot in terms of strengthening relationships.
Taking the actions above can help you keep LPs engaged and empower your firm to achieve better results. By implementing the right outreach strategy and the right tools to support it, you can get and maintain the attention of anyone whose interest matters to your firm.
Equip your investor relations team with proven technology to increase LP engagement for the long haul. Our guide, How Firms Focus on an Excellent LP Experience, shares content like this and much more. Download the guide below.
For many years, the standard regarding private equity annual meetings has been to conduct in-person gatherings or, at least, hybrid meetings. The COVID-19 pandemic has caused firms to rethink that practice. Now, the industry has shifted to virtual annual meetings and gone through the inevitable trial-and-error phase as organizers determined the best way to conduct these events.
Enough virtual annual meetings (and remote meetings in general) have been held now that best practices have emerged. Four tactics that firms have found to be particularly important are explained below.
We’ve all learned in the last few years that it’s much more difficult to stay engaged and attentive in virtual meetings in general. Consequently, it’s important to focus on what the majority of attendees want and need to know to address any other issues with follow-up conversations.
There are many polling tools you can use to conduct your survey, including SurveyMonkey, Typeform, and Google Forms. Then store your poll results and notes for each respondent in your private equity CRM. Now you have the ability to contact them if you were unable to answer their questions during the meeting and have greater insight into what’s important to them and leverage the information in the future.
Private equity firms historically held annual meetings as all-day affairs or at least 8-hour events. For virtual annual meetings, the average person won’t be able to sit in front of a computer screen and absorb information for more than 3-4 hours. But you can leverage the results of your attendee survey to help you prioritize session topics to ensure your attendees get the information they need in a single, shortened session or in a few shorter sessions held over a couple of days, as is becoming more common in the industry.
While virtual meetings are very common today, not everyone has experienced them. So, it’s a good idea to document rules that can guide behavior and help make virtual annual meetings more productive.
For example, you should request that attendees mute their microphones when not speaking. You should also develop guidelines for when attendees should and should not ask questions, and explain when and where any questions received through a “chat” function will be answered.
Live virtual annual meetings tend to be the standard today. Without having to jump on a plane to attend, investors can experience the session in real time. However, it’s still important that you record your virtual annual meetings and make those recordings available to attendees.
Some may have missed important content or will want to watch certain segments again. You can also share the recording with any non-attendees who could benefit from the content. A great way to do that is through a virtual data room and engagement portal like ShareSecure. It’s the ideal tool for providing secure access to your recording since it has enterprise-grade security features.
And, of course, you want to be very familiar with the video conferencing service you choose to use for your virtual annual meetings. This includes knowing how to get prompt technical assistance if needed. For all the progress that’s been made in using video conferencing systems, everything from small glitches to major problems still occurs at times.
As noted above, products like a CRM and an LP Portal – are especially valuable at a time when remote work and virtual annual meetings have become the norm. With leading-edge tools like these, getting up and running is easy and the intuitive interface helps users get comfortable and productive quickly. Beyond virtual annual meetings, the Altvia technology suite can help your team navigate deal flow management, investor relations, fundraising, and firm operations more efficiently and effectively. See how private equity firms use Altvia by viewing our clients and case studies.
Investor Relations (IR) teams are critical for firms. These people are the essential relationship drivers, and their work is a representation of the firm.
To develop an effective IR strategy, teams must understand how to best interact with investors, be visible, and adapt to market changes to ensure effective communications.
To do their job well, IR teams need to juggle a variety of activities:
IRs are the overseers of the firm’s common workflows. They must regularly share information like PPMs, Cap Calls, and Distribution Notices with investors and stakeholders.
Investors and stakeholders require regular reviews with in-depth analysis of their portfolios. IRs are responsible for presenting performance data clearly and correctly.
A good IR team needs to read into investor and stakeholder engagement to identify proper follow-up and relevant topics to focus on.
IR’s responsibility is to triage the many requests received from investors, analysts, and others. To streamline communications and empower investors to get information when they want it, IRs can establish a self-serve system where investors can look up the information they need without always asking for it.
To be effective, IRs need to be proactive and reduce the amount of time it takes to do administrative tasks while increasing the quality of their communication with investors.
How can they do this? With the help of technology.
Post-pandemic, the organizations that will thrive will put humans at the center and deploy technology to increase the speed and quality at which companies can innovate and communicate. This is where the IR team fits in. With a human-centric approach and technology adoption, firms can support their IR teams with data-driven insights, automation, and tools that empower investors—creating longer-lasting relationships.
Deploying technology faster is critical in an environment where accelerated technology adoption is reinventing everything from education to Saturday morning cartoons. Those who accept this innovation are better off today and more adept at pivoting when the unexpected occurs. The firms that invested in technology fared much better than those that were technology-adverse during the 2020 pandemic.
Technology can arm a firm with knowledge instantly instead of requiring hours of manual research. With a tool like Altvia, IRs can sift through mountains of data in seconds to gain better insight into their investors, what they need, and where their interests lie.
It’s also advantageous to empower investors with access to the information they’re looking for instead of continuously relying on the IR team. Through Altvia’s secure portal, investors can review information and analytics at any time. There’s no need to wait for an IR team to return their calls or emails—all the information they seek is right at their fingertips.
This process reduces time spent on one-off requests and takes advantage of firms’ data, interactions, and industry knowledge to build stronger investor relations.
Through this portal, IRs can also gauge what type of information their investors are most interested in. Altvia’s portal access helps firms identify talking points and events that their investors want to know about.
Automating communication can also reduce the manual labor IR teams spend on common workflows and regular communications. Technology allows these types of outreach to be customized, automated, accessible, and distributed at the right time.
IR teams can’t expect to succeed at a data-driven approach with static processes and heaps of data stored in excel spreadsheets. They need to partner with a team like Altvia.
Since 2006 Altvia has helped IR teams implement new technology. Our pre-built dashboards and reports set firms up for success on day one and evolve with our clients. Get the most out of your investment with Altvia. See how we support top firms.
Once just a simple lunch and presentation, annual meetings have morphed into a critical event for General Partners (GPs). Typically taking place during November and April, these get-togethers used to focus solely on sharing current market insights, fund performance, and relevant investment decisions with Limited Partners (LPs). These days, while those topics are still on the agenda, there are several factors upping the ante when it comes to planning and preparation.
For starters, for some GPs, this meeting is the only time during the entire year when they see their investors face to face. Not to mention have access to a quorum of their investors for a specific amount of time. They’re also under pressure to strengthen their relationships with LPs, who attend an average of between 15 to 20 annual meetings a year.
Now that the majority of these meetings are virtual, there is more emphasis on making a connection through a camera. So in addition to communicating what needs communicating, the goal is now to make a memorable impression.
To stand out from the crowd of managers vying for LPs’ attention, GPs are putting much more effort into their annual meetings. Across Private Equity, the name of the game is engaging investors with more personalized communication on meaningful trends, insights, and of course, results. Below, we’ll dive into how GPs are using annual meetings as an opportunity to differentiate their brand and contribute to long-term ROI.
Rather than a meeting “everyone has to attend,” today’s annual meetings are being used as a strategic tool to offer an experience with real value. Of course, GPs are still covering returns, but the focus these days is on engaging investors effectively to bolster fruitful long-term relationships.
During a typical annual meeting, a GP will highlight portfolio companies, discuss investments that didn’t go well, and share long-term strategic goals. Firms offering a little something extra will host informal dinners with plenty of time for networking—and even some entertainment—to encourage those casual conversations that deepen relationships.
Of course, the LPs are still there for the numbers. To offer real value, you have to do more than update last year’s figures and explain what happened in the previous year. The Kap Group recommends developing meaningful content to share with LPs. Show—don’t just tell—what your team has been doing and what’s really behind the fund’s performance.
When we asked General Partners and Limited Partners in Private Equity about annual meeting prep, we learned that 41% of survey respondents feel the pain of creating annual meeting presentations. What’s more, LPs will be sure to share the presentation with their colleagues, so the final document must be able to stand on its own—and put your firm’s best foot forward.
With so much at stake, demonstrating that you’ve already made sense of the data you’re reporting on is a surefire way to stand out. While everyone has received the quarterly reports, it’s a safe bet that hardly anyone has read them and had time to derive any meaningful insights.
Thankfully, today’s fund management software is designed to track and report on exactly the data you’ll need to prepare for your annual meeting. For example, knowing who from your firm has talked to annual meeting attendees—and what they talked about—can be invaluable for starting conversations with investors that lead to future investments.
But who has the time to cull Excel spreadsheets and calendars of activity to track meetings and calls in time for the annual meeting? Adopting a good fund management software tool like AIM not only reduces the chance of errors, it makes gathering this kind of information as easy as clicking a button. You can also save your team time by using the tool to build an up-to-date guest list out of a shared database, sending out save-the-dates and invites, and keeping invitees up to date on all of the upcoming activities.
While the management stage of the investor relationship is all about earning trust and anticipating needs, the next stage—service—is where best-in-class firms truly differentiate themselves from the competition using an investor relations tool.
Instead of creating a more tactical management style, these savvy firms strategically position themselves to become less about “doing things right” and more about choosing the “right things to do” for their investors.
This approach boils down to everyone in the firm—not just the investor relations team—having a customer-centric perspective. Maintaining relationships is reactive; providing excellent customer service is far more proactive.
Top-tier firms understand this and seek out ways to use investor relations tools to provide added value to their investors through greater transparency, more co-investing opportunities, and impactful communications.
In addition to honesty, follow-up, and delivering more than expected (the keys to earning and maintaining your investors’ trust), transparency around investments is more critical than ever.
Take, for example, events that took place in Saudi Arabia a few years ago. In the wake of an American journalist’s death, investors who were bought into portfolio companies doing business with Saudi Arabia were understandably asking about their exposure. Historically, not all investors report on each company within the portfolio, but the best practice is to highlight any key issues that might affect the portfolio’s investments.
Best-in-class firms reduce risk and exposure by keeping their investors abreast of any changes affecting the companies within their portfolios. General partners (GPs) who provide detailed company updates on what is going on with their investments provide the kind of service that leads to investors coming back to the firm during the next fundraising cycle.
Co-investment opportunities are another way to grow your existing investor relationships. Co-investments bypass the standard fund by investing directly in a portfolio company. Technically, co-investments are a minority ownership stake with many co-investors already existing as limited partners (LPs).
Both LPs and GPs are actively seeking co-investments, according to a Preqin survey of fund managers and investors. That’s because:
With co-investments, not only do LPs enjoy higher returns and get to invest directly into the company at a minority ownership level, they pay lower fees than when investing in a standard fund.
To stand out from your competition, use a purpose-built private equity CRM system to track which kinds of co-investing LPs are interested in and what your firm has already presented to them. When opportunities arise, you’ll be well-positioned to target investors who are more likely to be interested. And you can do so with great ease, since finding them in your database and connecting with them is simple.
While investor relations teams routinely share capital and legal documents with stakeholders, this role calls for far more than transactional communication. Besides sending out a K1 every quarter and inviting investors to sit in on regular quarterly performance calls, you can provide additional value to them with newsletters, annual meetings, deal announcements, and opportunities to connect with other investors.
Staying engaged with your investors not only shows that you want them to be informed, but it also demonstrates that you’re proactively managing your investor relationship. Over time, this is what leads to repeat investments. When you enter the fundraising process again, you’ll be halfway to close if you’re managing relationships in this manner.
Best-in-class firms operating using a predictive approach are already adopting technology to share reports and fund information, and then track what the investors are doing with that information. Again, investor relations tools like Altvia can help you improve targeting and personalization in communications for a more impactful touch.
What’s the secret to being well-positioned when the next fundraising opportunity arises?
It’s all about providing an outstanding LP experience to your existing investors. When you leverage the right investor relations tools to do that, they’ll want to do more deals with you.
As we’ve outlined above, if you’re as transparent as possible, tailor co-investing opportunities to LPs’ preferences, and use every chance to communicate added value, you’ll be providing the exceptional customer service that attracts and builds successful relationships with investors for years to come. If you’re looking for more guidance on ways to improve the investor experience, read our full guide below.
There’s no question that private equity is booming. Investors have allocated more capital to this space over the past five years than at any time in history, according to Bain & Company’s Global Private Equity Report.
In addition, Pitchbook reported that a remarkable 23 startups have earned unicorn valuations in one recent year.
At the same time, deals are becoming more complex and the Securities and Exchange Commission (SEC) is tightening regulations. Naturally, this calls for greater scrutiny before deciding to invest.
For limited partners (LPs), transparency has become critical to their decision-making process. Before investing, LPs demand an understanding of how the data supports higher-level calculations and how it will impact their investments.
As a result, LPs expect companies and investment funds to disclose more detailed information, including the nature of their investments, compensation to their managers, liabilities, overhead costs, and investment performance.
It’s no longer enough to simply use private equity tools to put together a nice-looking report with pie charts and bar graphs. These days, the success of your business depends on understanding the impact of the relevant data—and sharing it openly with all stakeholders involved. After all, if you don’t, your competitors surely will.
As LPs demand more transparency, many private equity firms are adopting technologies that give them the capabilities to organize, track, and present insights from the huge amount of data available. A well-designed platform can help you track where you are in the fundraising process and easily communicate status updates to investors.
If you’re putting together monthly or quarterly updates, a purpose-built platform for private capital gives you the power to share documents securely and provides visibility into how often your investors are accessing the information.
Even better, it can help you automate reports and communications so that your investor relationship tasks—as important as they are—don’t take up so much time.
Of course, the critical first step before adopting a solution is to determine the information that is most important to you and your investors. This typically is not all information, of course. So, with that list in hand, your firm can create a process to collect the relevant data—whether it’s financial or non-financial—and build it into the tool.
It’s also worth noting that members of the C-Suite consider transparency critical. According to Deloitte’s Effective Investor Relations (IR): Lessons from the Trenches:
“In our case, management is executing on a five-year turnaround plan….and helping investors understand what the milestones are and what they can reasonably expect along the way is incredibly valuable,” says Rob Binns, former VP of Investor Relations at Hewlett-Packard, who now serves as CFO and VP of HP Software. The feedback from investors, he adds, is that “they welcome an honest, straightforward story—they don’t want to be sold to, they don’t want to be spun to.”
Altvia has developed advanced data and technology solutions specifically for the needs of private equity firms like yours. Our CRM combines the Salesforce platform with an email marketing tool to provide clear, secure, and easy-to-understand reports and communications to LPs.
The combined solution delivers advantages both for your clients and for you. Create an exceptional LP experience and support strong relationships while lightening your team’s workload.
Building healthy relationships with prospective Limited Partners is the only way a firm stays alive. Maintaining those relationships is a lot like advertising a firm to these investors. Your investor relations team wants to put their best foot forward and to make sure they’re seen favorably to the LP without compromising integrity.
Once an LP commits, keeping them engaged in firm operations is a whole different ball game in terms of marketing. It’s up to the firms to portray their ideas and their results in the best possible light.
As the world digitizes, investors expect an improved way for their GPs to discuss the important matters of payouts, capital calls, tax information, and investment performance among many other metrics.
This brings us to the crux of the issue.
PE firms need to prepare for the future by hedging against these 4 problems:
General Partners need a single source for all of their LP related documents and outreach.
This brings us squarely to the most optimized solution to GP struggles: an Investor Relations Platform. A dashboard with complex and customizable data visualizations which gets fed directly from the portfolio companies’ accounting data.
A truly viable solution to your investor relations team issues will not only manage the data visualization and interpretation of a firm’s performance but will actually predict the best metrics to show to an investor given the firm’s performance. Let’s go into how a well developed dashboard solves all 4 issues mentioned above.
At the end of the day, the biggest thing firms need to communicate to LPs is that they are trustworthy. There is no better way to do so other than letting LPs have (or at least think they have) a complete view of the inner workings of their investments.
Environmental, social, and governance (ESG) investing is becoming more popular among individual investors and investment firms alike. There are several reasons why ESG is gaining in popularity. But what can ESG investing mean for your firm?
Let’s take a look at what ESG criteria there is, and why private equity firms are taking it seriously for their own portfolios.
Companies that meet ESG criteria are evaluated based on a number of factors. These attributes are a great way for investors to find companies that match their values.
Most companies don’t meet the criteria in all three categories. Rather, they typically focus on one or two areas within the broader scope of ESG.
While some companies perform quite well in each ESG category, most commonly a company will excel in a particular area that is most important to them and where they direct more of their attention.
It is up to the investor to decide which value is most meaningful to them when making investment decisions.
ESG investing is becoming more popular with PE firms for multiple reasons. First, investors themselves are becoming more interested in investing in their values (read Why Firm Culture is Important for Limited Partners).
This is particularly true as Millennials begin to make up a bigger portion of investors, and Gen Z adults, who have not entered investment markets quietly, continue to build this trend. Therefore, PE firms need to be prepared to align with the values and investment desires of their clients.
Secondly, firms are increasingly viewing ESG investing as a way to avoid a variety of risk factors that impact company profitability and investor return. A company that consciously works to decrease its impact on the environment will, in theory, produce sustainable, long-term growth. This type of organization is also less likely to have to deal with a significant environmental disaster, which can cost billions of dollars.
Take the BP oil spill as an example. The Deepwater Horizon disaster occurred in 2010. In 2014, a U.S. court found that BP was primarily responsible for the disaster due to negligence and reckless conduct. By 2018, the incident had already cost the company $62 billion in cleanup costs and penalties.
Both the environmental and financial toll could have been avoided if BP had been more focused on good corporate governance and better environmental practices. There are many other examples of companies that have cost themselves and investors millions or billions due to poor environmental, social, and governance values.
Finally, ESG investing can help improve firm culture, a key factor in overall financial success. Employees are becoming more concerned with who they are working for and the impact that the company’s work has on the world.
Talented professionals want to have a positive impact on the planet and are increasingly pursuing employment with companies whose values align with their own. Developing a strong, values-based culture in your own firm will help you hire and retain top talent in the long run.
ESG investing isn’t necessarily new, but it is becoming more imperative for investors to make it a priority. Basing investment decisions on ESG requirements is a good move for PE firms that are looking to attract new investors to their firm. It’s also a great way to mitigate risks and build a strong company culture.
At a minimum, you should take a look at your firm’s investment portfolio and values to take stock of how your investors and firm could benefit from starting or increasing ESG investing.
Modern businesses have never seen such rapid technological advancements in private equity operations as we have in the last few decades. We’ve come to rely on technology like never before for a good reason—unparalleled efficiency.
Every industry on the planet sees the difference that digital technology makes to their processes, reporting, and communication. And since Private Equity often underpins crucial flows of capital and effective decision-making in many industries, there is vast potential with adopting technology.
Most companies believe their differentiation is rooted in having a smart, well-networked team with a good track record. But, if most companies think this same way, is it still a competitive advantage?
No, these intelligent, networked teams are blending into the pack. They need the right technology to give them a competitive edge.
Each Private Equity firm has a cobweb of processes. With today’s technology, the only way to be efficient in operations and beat the competition is to adopt technology that supports, elevates, and executes operations processes efficiently.
The pandemic has altered how relationships are built and made raising capital even more laborious as LPs require additional attention. The fundraising process has been prolonged, with most funds taking longer than 12 months to close. Companies can significantly benefit from tools that improve and speed up the processes while still giving LPs the attention they require.
What does raising capital look like without modern technology, like artificial intelligence (AI)?
Many firms have a process that involves copying and pasting email templates with details on a new fund, their strategy, and historical track records. They then follow up that email with a call to secure interest. It’s a slow process with no clear, systemized prioritization of prospects. Everything is tracked on a spreadsheet. It’s manual, it’s time-consuming, it’s not efficient, and nothing about the process distinguishes your firm.
Companies that embrace technology are better equipped to define and measure workflows—ultimately gaining knowledge to achieve better results. With the right tools, they can come to the table armed with information to help target the right prospects and close a fund faster by identifying:
Knowing these data points helps businesses hone in on what works and avoid wasting time chasing prospective investors that are less likely to close. Firms can focus on LPs and investors who fit a specific profile to close the fund and generate the best returns.
Technology can also help firms communicate their competitive edge with data. By using objective data, companies can convey their track record, ongoing execution of investment thesis, and other critical points of differentiation.
Managing deals with dated technology brings about a similar process: firms use spreadsheets to identify sources and the best deals from the last fund, they reach out to the respective management teams and get a deal process started. From beginning to end, it’s all tracked on a spreadsheet or a basic CRM. There’s a lack of coordination and access to relevant data that would significantly increase efficiency.
How can firms find and execute better deals?
A company’s most proprietary data is just the beginning, and capturing more information related to their activities and from additional 3rd party datasets will paint a more holistic picture.
With modern technology and AI built for Private Equity, firms can gain access to a centralized database, prioritize deals based on returns, gain visibility into networking and communication efforts, and craft a comprehensive view with 3rd party data from tools like Pitchbook, DataFox, and SourceScrub.
Gaining visibility into the pipeline gives businesses the ability to move forward with a data-driven approach. It becomes easier to identify priority areas like deal sources and stages. Historical data plays a part in determining where you can improve future deals and optimize performance for optimal returns.
Low-tech firms monitor portfolio performance with more emails and spreadsheets. One-off emails containing excel documents with firm metrics are sent to the portfolio company’s CFO.
Then firms spend a few weeks trying to connect with the CFO and follow up with more excel spreadsheets packed with smart-art charts and pie graphs.
The snail pace is exhausting for everyone involved—especially since it matters how fast the business can identify high-performing opportunities and take action—knowing which investments are performing best and dealing with sources that yield the best results and returns are essential. The best businesses need to pull out trends, understand if an investment is off track, and intervene accordingly.
By getting accurate information from portfolio companies with a standardized collection method, firms can bring storytelling to life with data and leave the competition in the dust.
Modern technology for Private Equity firms provides:
• Portfolio Metrics (Financial & Operational)
• Portfolio Firmographics
• Benchmarking & Forecasting
By streamlining portfolio company reporting and data collection, firms spend more time understanding value creation and portfolio health. This understanding leads to better management, improved performance, happy investors, and ultimately more wins.
Sending investors to a tedious document storage site, hoping they don’t get lost, and praying they don’t lose their password does not equal quality investor relations or the likelihood of a long-term relationship.
To improve quality and efficiency with investor relations, it helps to be proactive and automate common workflows like PPMs, Cap Calls, and Distribution Notices. By doing this, businesses reduce time spent on one-off requests and take advantage of their data, interactions, and industry knowledge to build stronger investor relationships.
Technology can measure investor engagement to inform follow-up activities and talking points. If firms can see that an investor keeps coming back to look at a specific report, they can check-in, provide additional resources, and clarify any discrepancies.
Opening up self-serve analytics in a user-friendly and secure portal provides an advantage to both investors and firms. Investors won’t have to wait for the information; they can go in and get it when they want it and feel reassured that their data is secure.
By upgrading technology into the modern era, Private Equity firms have a lot to gain. Every firm has a “smart team,” and you need more than spreadsheets to help you make essential decisions in raising capital, deal and portfolio management, and investor relations. With modern software that uses AI and specializes in Private Equity, firms can supercharge their efficiency to stand out in the crowd.
