Private Equity Operational Efficiency: 3 Steps to Differentiate

With increasing pressure from investors about fees and fierce competition across the industry, private equity CFOs are looking for new ways to streamline and stand out. Operational efficiency is a top priority for many private equity firms and executives. 

It is no surprise that firms are investing in private equity technology to address these key challenges and many more:

  • Making data management more efficient
  • Improving reporting capabilities
  • Integrating systems for a stronger investor communication platform

Whatever firms are looking for, transformation through purpose-built private equity technology is now the name of the game. 

Key advantages that come from investing in new solutions include:

  • Optimizing workflows
  • Reducing operational expenses
  • Freeing personnel resources to focus on more strategic endeavors that support revenue growth

And those advantages together help firms achieve their ultimate goal: standing out from the competition.

In this blog post, we cover how private equity firms can improve operational efficiency and their ability to create an unmatched stakeholder experience to differentiate themselves in the marketplace.

Step 1: Use Private Equity Technology to Make Data Self-Serve

What if every stakeholder could access the real-time information that’s relevant to their specific goals—and get that data whenever they wanted it? 

That’s crucial since every stakeholder has different interests and needs. So, sending out, or providing access to, the information you think they’ll want is a strategy that’s bound to fail in many instances. One-size-fits-all is not an approach that works in private equity.

Intuitive solutions like Altvia give customers, investors, or constituents easy, self-serve data access and important functionality right on their desktop. After taking just a few minutes to learn how to use the intuitive tools in the software, the entire team is able to work more efficiently, spend less time waiting for information, and more time acting on its insights.

We all know that timing is everything in this industry. Miss connecting with someone—by days, hours, or even minutes, in some cases—while your competition is doing exactly that and you may miss out on starting or strengthening a long, lucrative relationship.

Step 2: Ensure Quality Control with Private Equity Technology

In addition to offering a simpler way to manage information, today’s private equity technology solutions can drastically improve your firm’s data quality control, flagging miscalculated or outdated data automatically. Providing stakeholders with inaccurate or old information is a sure way to make them question your attention to detail and also your capabilities in general.

With more accurate information from the get-go, your firm is poised to put together more profitable deals. Another plus? You can consolidate data from multiple sources into one central private equity technology system and optimize workflows to scale for growth.

Step 3: Leverage Technology for Private Equity Efficiency

Whether you’re working on the initial round of funding or are just days away from closing the deal, the reporting tools in today’s private equity technology can ensure everyone on the team is on the same page. What’s more, these tools can improve the efficiency and effectiveness of reporting to investors.

You can also take advantage of convenient communication tools for connecting more efficiently with busy investors. Stakeholders appreciate getting timely, concise, and helpful information.

Private Equity Technology Is the Key to Steady and Significant Improvement

Of course, throwing private equity technology at a problem is not going to change your business overnight. It’ll take some time and effort to implement a new system the right way. But in the end, your team will be able to work on more fulfilling—and profitable—tasks that set your firm apart.

A traditional crm was built for general ‘customer’ scenarios

Software platforms have made the world a better place by making work a better place. Indeed the world is better off when people enjoy their jobs even marginally more, and workplace applications on big CRM platforms like have done that and much more.

But the potential that platforms like these offer presents diminishing returns: once the platform provider has engineered too many industry specific components into its platform, its usefulness for other industries begins to be threatened, and with that so do the usefulness of the component tools built into the platform.

So it is with the CRM category that has defined: it is generic enough to work for many industries, and yet still offers the potential for others to round off the edges and nail more vertically-oriented and extremely tailored software solutions.

Private capital markets are actually a great demonstration of this dynamic. Where generic CRM platforms simplify — appropriately so — to assume there’s a business, a customer, a sale, and service of that customer, there are a few industry-specific pieces that are missing.

Take for example, that investors become customers by investing through legal entities the GP raises. It’s a subtle but important nuance that just doesn’t make sense at a platform-as-a-service level (because it’s overly complicated for a simple one-time sale that many industries require), but which can easily be added without 10 years or software engineering. Once provided, the rest of the platform’s components become tremendously powerful again and you’re set to take over the world.

As a traditional CRM in our pillars methodology, these nuances must be present to properly account for investors in these legal entities, potential target companies and which are owned by these entities, the context of all interactions with these parties (as well as the appropriate overlap, ie co-investments), and how you’re arriving at finding these opportunities on both sides of the equation, such that you’re able to piece together what’s effective and what’s not. Not just because we say so, but because these are the very relationships and data that are key to the motivation behind a CRM in any industry.

It’s critical, too, that the valuable publicly-available information that helps to enrich CRM systems and save users painful steps of entering it themselves is fully-integrated at the platform level.

Again, look no further than the 3,000+ pre-built integrations that — the creator of the CRM platform concept — has at a platform level to do so, and which only exists by way of holding just short of overly-specifying certain industry workflows that would present challenges to properly integrate.

Stakeholder reporting and communication (investor relations) draws on a range of datasets

The traditional “customer service” model of CRM systems once again makes overly-simplified assumptions about the customer relationship when applied to private capital markets.

In fifteen years I personally have yet to hear the terms “warranty” or “service call” in this market because it’s just not the same. But make no mistake, as uncomfortable as it may be to say aloud, customer service is more important now than ever and it’s constantly happening; the industry is, after all, considered to be a financial “service”.

As it turns out, that service is primarily information-based — it’s driven by data and takes the form of reports and analysis that drive decisions, and then end up again in investor-facing reports and analysis.

The foundational elements of a private capital markets CRM must be built such that they accommodate this data (like we discussed above), but so too that it can accommodate additional supporting data that investors (customers!) need in the context of service.

Oftentimes this supporting data — financial metrics and time-based values, for example — is believed not to meet the traditional definition of CRM and the natural thought is “well, better do this in Excel!”.

While I happen to believe Excel is still the greatest software application ever built, its introduction to this value chain we’ve discussed herein actually creates the problem many firms suffer from: key data needed to provide customer service (again: effectively the entirety of a firm’s reports and analysis) is now in disparate systems and detached.

Both of those dynamics are important and distinct: not only is this supplemental data disparate, but when brought together there is no logical association that can be made between the two data sets.

Allow me, then, to make the point very simply: not only can this financial and time-based value data (you may be thinking about is as “portfolio monitoring” or “accounting”) be a part of a CRM, it is arguably the most important part of a CRM because it’s at the core of what providing service to the customer entails — information that comes out of data!

Firms need a digital method to engage stakeholders (ie investor portals)

Investor portals are not new; in fact, for many of us — including myself — they conjure up horrifying nightmares in which we’re aimlessly guessing at folders to find the newest document we need.

So in lies the opportunity: not only have the portals we’ve come to hate not simplified the process of acquiring information, they’ve failed to create an entirely new experience that is “customer service” driven.

To be fair, this is not a B2C market where you’d be long out of business for not having focused on customer service and thus the customer’s technology-driven experience. But don’t expect to be around too much longer if you aren’t thinking about this shift.

Today’s institutional investors increasingly expect this same consumer-like experience, and a massive opportunity is being missed by not providing it. It’s not about providing them the experience they desire; it’s more about the ability to measure engagement that is had in return.

Put simply: what’s keeping the market from providing this experience is the availability of the information that’s required to create the service that provides the experience.

If you’ve hung in this long, you know that by focusing on your CRM, you have the data that’s required to manage the customer relationship and the technology-driven experience through which that information is shared to create a differentiated and opportunistic customer experience.

investor experience