Private equity technology that’s purpose-built is hard to come by. In a recent whitepaper titled, “Technology and the contemporary private equity firm,” we identified five major challenges facing modern dealmakers and how a technology-forward approach to internal operations and investing could alleviate many of the pain points private equity professionals feel. We’ve spent countless hours getting to know the varying strategies that private equity firms of all shapes, sizes, and geographies deploy. As a result of that work, we have developed actionable and effective solutions for their most challenging organizational obstacles.
Founded in 2010 by a team of deal professionals, DealCloud has private equity operations and know-how in its DNA. Over the last 10 years, the DealCloud team has helped more than 400 private equity firms transform the way they work. With our collective intelligence and experience, we’ve developed a technology blueprint that leverages industry best practices so that private equity firms can recognize the value of their new technology platform quickly.
In the first part of the DealCloud Blueprint series, we dove into the technology blueprint for investment banks and advisory firms. Continue reading below to see just a sample of what DealCloud can offer within our technology blueprint for private equity firms.
Getting started with private equity technology
When a private equity client signs with DealCloud and enters the implementation stage of onboarding, our team reviews the blueprint with the various user groups at the firm. Given the similarities across many private equity firms (especially in the middle market), our blueprint enables firms to execute on their day-to-day activities such as pipeline management, intermediary coverage, and due diligence. From here, our team will further enhance the solution to fit your firm’s unique requirements.
Track active deals by team member and deal stage in the Staffing Dashboard
Deal lifecycle analysis
One of the most impactful features of DealCloud’s private equity technology blueprint for is the deal lifecycle analysis. By tracking the stages and details of all the transactions the firm has in its purview, every firm gains access to an analytical framework that will grow and become more useful over time. As seen in the images below, the blueprint presents a long list of ways to classify a deal, including “dead,” “lost,” or “passed.” Once a firm classifies enough deals, they can perform deal analyses (and layer in other data points such as industry or geography, for example).
To create deal lifecycle analysis dashboards, deal teams can simply insert their proprietary transaction data into the DealCloud technology blueprint. From there, they are able to actively track and analyze how far a deal advances, as well as the reason(s) that the deal stopped progressing. And because the private equity technology blueprint DealCloud platform is extremely flexible, you can dive deeper into the analysis by layering on certain filters such as deal owner, region, industry, and more.
Dead Deals dashboards can uncover the many reasons that a deal doesn’t progress further in the transaction lifecycle, making it easier than ever for the firm to optimize or reassess their sourcing strategy
Any DealCloud dashboard, including the “Dead Deals” analysis seen above, can be visualized based on a chosen time horizon
No firm likes when a deal is lost, but “Deals Lost” dashboards like the one seen above make it easy for firms to quickly assess their competitive strengths and weaknesses
Deal Detail pages contain all relevant information for an individual deal
Intermediary coverage and reporting
We know that deal sourcing is the lifeblood of a private equity firm, and competition for deals has never been higher. Using the tools provided in our blueprint from day one, DealCloud clients can holistically track and improve their deal sourcing and relationship management operation.
Best-in-class private equity firms using DealCloud leverage dashboards to visualize and report on the strength of their network and the efficacy of intermediary coverage program. An organization can input their proprietary contact and deal information to get a picture of where they stand with an intermediary or advisory firm, the number of deals and introductions sourced from each, as well as the status of the deal. From here, firms can zero-in on, for example, the success rate (percentage of deals that progressed past IOI, LOI, management meeting, etc.) of deals that were sourced from a specific contact or firm. By performing this type of analysis, firms can review their deal sourcing relationships in terms of who is providing the highest deal volume or who is consistently showing large deals. This also helps ensure that marketing and business development efforts are properly aligned for the relationships that provide the most value for the firm.
Relationships can also be categorized based on tiers according to the metrics that are important to your team. Frequency of interaction, deal volume, deal size, deal stage, and many other data points be factored into the score and health of an intermediary relationship. Because all of these capabilities come standard in our technology blueprint, private equity firms experience no gap in their relationship development and intermediary coverage initiatives.
Intermediaries and advisory firms can be ranked based on any data point, such as the number of proprietary deals shown to your firm
Above, all deals sourced over time -categorized by contact type
Analysis of your deal sourcing network can be carried out down to the contact level in sortable tables
Detailed analysis of intermediary contacts by type
Industry and sector focus
All of our clients are all unique, so the tools in DealCloud are built to broadly fit the way most firms do business and then get finely tuned to the needs of each individual business from there. For example, the Industry and Sector coverage dashboards that come standard in our private equity technology blueprint enable firms that are industry specialists to keep a keen eye on their pipelines, across whichever industry or industries they include.
More specifically, the blueprint enables 360-degree industry and sector reporting. As shown in the images below, active deals can be broken down by stage, industry, deal volume, and more. Industry and sector breakdowns also enable users to click into a specific sector and quickly see all active and passed deals, as well as to drill down do deals at the sub-sector level. This type of granular industry, sector, and sub-sector reporting and pipeline management has been refined and built specifically for the way private equity firms operate, and to be customized to fit the needs of an individual outfit.
Deal Volume dashboards can be broken down by the industries that your firm is most interested in
Active Deals dashboard broken down by deal stage and industry
Above: Industry dashboards broken down by sub-sectors and sorted by number of target companies
Sector detail pages can show high-level statistics and deal counts as well as any other details as large value numbers
Healthcare deals pipeline broken down by sub-sector and sorted by investment amount
Our private equity technology blueprint is frequently updated and is always being molded and inspired by the activities of our clients. By leveraging their cumulative intelligence, we can continue to make the technology “starting line” for private equity firms better and better. From here, DealCloud can move more quickly into the site enhancement process where our team finely tunes the technology to match the exact requirements of each unique firm we serve. By learning about each firm’s long- and short-term goals, we can provide the consultative support needed and ensure that that our technology will facilitate these goals.