Why Investors Need Secondary Market Pipeline Technology

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Investors who use secondary market pipeline technology are having their day in the sun. In the past, investing in alternative assets was not a primary focus or strategy for most private equity firms. Now, as the market evolves, post-pandemic, capital allocators are dedicating more and more space within their portfolios to secondary investments.

According to a June 2021 survey by Institutional Investor, 77% of limited partners have already made secondary investments, and 21% of allocators said they plan to increase their exposure to private equity secondary funds within the next 3 to 5 years. Forbes also predicts that deal volume for secondaries will top $100 billion for the first time ever this year after seeing considerable growth in both 2019 and 2020.

As the focus on secondaries continues to grow, limited partners need to feel confident that they are managing their primary and secondary investments and portfolios in the most efficient way possible. In this article, we will review why purpose-built secondary market pipeline technology and management solutions are vital to the success of today’s secondary market investors.

 

A Single Source of Truth Built for Secondary Investors

When juggling multiple portfolios with various funding sources, documents, points of contact, and organizational needs, it can be easy to mismanage data and real-time updates, especially when all that information is stored in different and often disconnected platforms. Today’s most successful secondary investors know that building a single source of truth for their data, relationships, and deal pipeline is vital to effective portfolio management. Typical CRMs only solve some of these problems, which is why we created DealCloud with the needs of secondary investors in mind.

 

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DealCloud can store and organize all your firm’s information so that you never have to chase updates in separate platforms.

 

Thanks to software integrations such as the DealCloud Microsoft Outlook add-in, relevant information like new contacts, file attachments, meeting notes, due diligence checklist items, calendar events, and other metadata can be synced and automatically updated to the firm’s secure instance of DealCloud right from your email inbox. Most secondary investors use DealCloud’s third-party data tool to integrate data from providers such as S&P Global Market Intelligence, PrivCo, FactSet, and SourceScrub to unlock additional insights, reduce manual data entry, and save time and effort. Leveraging secondary market pipeline technology in this manner increases the likelihood of closing deals by increasing organizational efficiency and institutionalizing data in one centralized location.

 

Dedicated Dashboards for Secondary Pipeline and Portfolio Management

Just as your secondary investments deserve dedicated time and attention from your limited partners, these investments also deserve dedicated dashboards and data visualizations in your CRM. By implementing a pipeline management solution like DealCloud — one that’s created with secondaries in mind — you can build customizable dashboards to manage your transactions as they move from one pipeline stage to another. You’ll also be able to manage your firm’s multistrategy portfolios more efficiently.

 

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Create high-level dashboards and automated reporting that display your capital allocations at a glance. Click on any data point to see more information, when it was last updated, and by whom.

 

When you choose to implement a CRM perfectly tailored to the needs of your firm, you create a more focused and relevant pipeline management experience for all parties. You and your peers will spend less time searching for unorganized or segregated information and more time focusing on due diligence, pricing negotiations, and relationship development.

Dashboards within CRMs like DealCloud are also fully customizable, allowing you to track deals and create reports that will serve your firm’s unique needs and help your firm thrive in the complex world of secondary market transactions. Deal and investor relations professionals who need a more granular view of the portfolio can leverage the report level filters on any dashboard to drill into a specific strategy, industry, fund, or other data layer.

 

Relevant and Timely Reporting

Secondary investments often enter the pipeline in a flash. When a fire sale occurs or a limited partner calls for more information, no firm wants to be left scrambling to find data or assemble reports. By implementing a deal and relationship management solution like DealCloud that both centralizes data and provides best-in-class data visualization capabilities, secondary investors can build customized reporting that presents vital information to relevant parties with the click of a button. Your firm will no longer need to build and share reporting manually, saving you and your professionals a significant amount of time and effort. DealCloud also helps your firm stay more informed by providing updates in the frequency that best serves your needs, even if that need is immediate.

 

Modern Secondary Market Pipeline Technology

The focus on secondary investment opportunities is here to stay, and its importance only continues to grow in the capital markets industry. Whether your firm is well-seasoned in the secondaries market or just exploring the benefits of a multistrategy approach, be sure to schedule a demo to learn more about DealCloud’s secondary market pipeline technology.

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Author:

Katlyn Kohler

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