“The management teams that embrace analytics are those that you want to back” quips a private equity investor at the Wharton Customer Analytics conference earlier this year in San Francisco. Moreover, “those that actually resist [data analytics] should actually raise some alarm bells for you…. Is it a point of pride? Are they trying to get the highest valuation for their companies by not showing you the full transparency of data?”
This passage was cited in a recent piece, Data Analytics Is (Slowly) Transforming Private Equity. It’s great insight into how various private equity firms are embracing data analytics within their strategies and the response from the GP and LP community. The article is worth the read, particularly the highlights from Sajjad Jaffer and Ian Picach of Two Six Capital’s keynote address during the conference. You know, SPS can’t pass up on a good post featuring data and analytics.
The piece does bring to light a few important issues, namely that firms that outright refuse to embrace data are potentially hiding something, or it clearly illustrates that inertia is strong in the private equity space. Investors that can see past the challenges of incorporating data have the potential for greater long-term growth and success. Recently, SPS sponsored and participated in a PE/VC webinar focused on measuring and boosting deal flow. Through an engaging conversation, panelists discussed the importance of improving market coverage and increasing relevant deal flow through advanced analytics and automation to build meaningful relationships.
SPS’ Nadim Malik demonstrated through a breakdown of the intermediary landscape how private equity firms can utilize data to evaluate and strengthen deal origination, as well as to improve overall fund performance. As presented, there were more than 820 active intermediaries in 2018, with 70% closing 3 deals or less. This is a huge opportunity to evaluate those advisors based on sectors, strengths, and size range to see which firms are worth prospecting as potential new deal sources.
The presentation also highlighted other areas to incorporate key-market and business development data and how this intelligence can influence an investor’s marketing travel, market coverage evaluation (SPS DOBR), and the use of next-generation technology to embrace the new age of deal sourcing.
Data is no longer a buzzword, it’s embedded into our everyday life to streamline decisions, gather information, and connect our communities. Embracing data in private equity investing is certainly transforming the private equity and Alternatives marketplace. As we look to the second half of 2019 and the start of a new decade, put away the Rolodex and black agenda books, this is no longer your father’s private equity business – data is here to make deal sourcing more efficient. For more on the transformation of private equity through data and how to stand out in this competitive market, access the full webinar recording here.
Last week’s deals today
July 1 – July 5, 2019
~127 deals traded
Deal of the week
Publicis Groupe SA completed its acquisition of Epsilon for $3.95 billion. Headquartered in Texas, Epsilon is a provider of marketing software solutions that integrate data, creativity, and technologies for advertisers. Bank of America Merrill Lynch, Evercore Partners, Morgan Stanley, and Wells Fargo Securities provided sell-side financial advisory services.
Most active subsectors
- IT: Software & services
- Financial: Insurance
- Financial: Asset management & advisory
- Financial: Services
- Food: Consumable food products
Most active cities
- New York
- San Francisco