You would think that dealmakers are left sitting on their hands during periods of inactivity in dealmaking and fundraising. However, private equity firms are finding that technology and other strategies are accretive to increasing efficiency within their firms. Brad Haller, a senior partner with West Monroe’s private equity team, explains.
“First and foremost they’re focusing on their portfolio companies. Firms are focusing on their existing investments,” says Haller. “So that can be operational improvement things. They want to limit that margin compression that has resulted from drops in valuations, they are spending time on raising new funds, and they’re spending time with the portfolio companies on add-ons. And lastly, we’ve seen a lot of funds spend time thinking about their own operations.”
Firms are asking themselves questions like How can they work more efficiently? How can they have better knowledge management? How can they be better at collaboration? Workflow technologies for how a deal that comes across their desk…How does that work?
And then given how much the private markets play a role within our economy now, Haller notes that there are quite a few technology providers specifically for private equity firms. Mosaic is a firm for more efficient modeling operations for deal teams. Firms are looking at that technology and implementing it. They have more time to learn the new processes and tools so that when things pick back up they’ll be more efficient.
Firms like West Monroe are working to assist companies to become more valuable through the increased utilization of technology. Firms are using technology in these lulls for both cost optimization and revenue growth. Haller notes that firms ought to make the most of technology to better capture revenue through increased understanding of customers, capturing of new customers and retaining those customers.
Mosaic and West Monroe aren’t the only firms getting in on the technological transformation game. Firms like Amplix, which provides data connectivity, cloud telephony, customer experience, security and managed services, business continuity, cloud optimization and data center services, was recently purchased by Gempsring Capital. Additionally, Allvue Systems offers streamlined investment solutions that improve workflows and efficiencies across a variety of industries and roles for both general partners, limited partners and fund administrators.
What is your firm doing during downtime to enhance operations or efficiency? Let me know at [email protected].