Data, Leaders, M&A, PE Firms, Strategy

Optimizing Mergers & Acquisitions

Private equity (PE) firms are harnessing data and technology more than ever, utilizing them as key instruments for crafting value. The journey, however, is not without its hurdles, particularly when it comes to synchronizing data and reporting standards across various portfolio companies. The essence of high-quality data cannot be overstated—it is the cornerstone of insightful decision-making and stringent financial governance.

Bridging the technology divide can catalyze growth and refine operational efficiencies. Prominent players in the PE arena, such as KKR & Co Inc, Blackstone Inc, Thoma Bravo LP, TPG Capital LP, and Advent International Corp, are leading the charge in tech investment, showcasing a strategic pivot towards innovation, as highlighted by Global Data.

This article explores the critical impact of data and technology in driving growth and amplifying value within the private equity landscape. It includes expert perspectives from Jason Pikoos, Managing Partner at Connor Group, renowned for his expertise in finance technology transformation, operational enhancements, and data analytics, alongside Jason Jones, Co-Founder of Partner-Go-Live, who brings a wealth of knowledge in facilitating technology and PE partnerships and innovations.

How Private Equity Firms Drive Value:

To maximize growth and value creation within their portfolio companies, private equity firms must navigate several key stages effectively:

  • Pre-acquisition due diligence: Conduct thorough evaluations and financial assessments of potential targets for strategic planning.
  • Financial management: Develop financial models and forecasts, driving operational efficiencies while managing on-going operational and accounting tasks.
  • Technology adoption: Post-acquisition, implement technology to scale growth, enhance transparency, and foster timely data-driven decisions that maximize returns.
  • Preparation for sale: Organize financials of portfolio companies to optimize valuation ahead of sale or liquidity events.

EY notes that the typical four-to-six-year holding period by private equity firms is a critical window for implementing value-creation strategies across sales, marketing, operations, and finance, aiming to improve the company fundamentally to enhance returns and cash flow.

Challenges in Portfolio Oversight:

Aligning data and reporting across portfolio entities poses significant challenges, often leading to delays in metrics production, inconsistencies, and errors. High-quality data underpins effective decision-making, market responsiveness, operational flexibility, and financial control, all essential for PE firms to enhance their investments.

Jason Jones, emphasizes the importance of moving beyond traditional, labor-intensive methods like spreadsheets for data management. He advocates for real-time data access to facilitate quicker, more informed decision-making processes.

Private Equity Firms: The Path Forward with Data Infrastructure:

By evaluating and upgrading their data infrastructure, PE firms can unlock additional value and achieve operational excellence, essential for capitalizing on value creation  opportunities. “Good data is foundational for profitability and understanding your business,” Jason Pikoos remarks, highlighting the dangers of operating without it.

The Future of PE Investments and Data Automation:

Imagine a future where PE firms utilize data automation platforms like Syncari to integrate data from disparate systems seamlessly (including but not limited to Salesforce, HubSpot, and Zendesk), allowing for a comprehensive, real-time view of individual companies and the overall portfolio performance. This approach not only streamlines reporting but also enhances decision-making capabilities and speed, leading to more strategic and profitable investments.

Leading PE Firms Investing in Technology:

KKR & Co Inc, Blackstone Inc, Thoma Bravo LP, TPG Capital LP, and Advent International Corp stand out for their significant investments in the technology sector, demonstrating a keen focus on growth and innovation within their portfolios.

The Strategic Advantage of Unified Data:

Access to unified, comprehensive data enables PE firms and their portfolio companies to scale and innovate with greater confidence and efficiency. This approach ensures data integrity, provides actionable insights, and facilitates growth, setting the stage for enhanced profitability and success.

For further insights and strategies on leveraging data and technology in private equity, reach out to our experts today.

Join 10,000+ customer data thought leaders.

Follow weekly insights at the intersection of GTM, RevOps and data strategy.

Thank you for signing up!