How Private Equity Firms Can Get Ahead of the Competition with High-Quality Data
Sarah Cheeseman, 23 June 2023
In the past, many private equity firms tended to rely on networking and existing relationships to find potential investment deals and learn more about their specialist areas. But many modern firms are now finding this way of working is no longer bringing in the best opportunities. They’re looking for new ways to connect with exciting and innovative businesses, and they want to be the first to the plate when any of these begin looking for funding.
In the UK especially, businesses within almost every industry are starting to look at company data as the best and most reliable source for finding new opportunities. And this is no different for private equity firms.
How do private equity firms use company data?
Sound decision making is right at the heart of what makes any private equity firm successful. But with so many different businesses out there to work with, pinpointing the ones that will be fruitful for your firm, within reasonable time periods, is complex.
Reliable, up-to-date company data can be very useful when it comes to finding and researching potential investment opportunities. The trick is to have a solid grasp of your firm’s investment thesis; knowing exactly which companies do and do not fall into this. This could be based on a number of different factors, such as industry or niche, growth stage, or founder track records. Enhancing your process with sound data makes this process much easier and addresses the challenges that inevitably arise during the investment process.
The benefits of using company data in your decision making processes
Having a data-driven analysis and decision making process in place at your private equity firm can make a huge difference to your business. Some of the key benefits include:
For any busy firm, there is nothing more valuable than time. By relying on data-driven analysis, you can spend less time working on opportunities that aren’t going to be valuable for you and put more focus into those that do. The more time you can save, the more money you can make.
One of the best things about becoming a data-driven firm is the effect it can have on your operational efficiency. Once you have outlined your investment thesis, it will be much quicker and easier to highlight businesses that are of interest to you, cutting down on the time and energy that’s currently spent on screening inbound leads and completing top-level due diligence.
Improve investment returns
The better insights you can get with your data, the more you can fine tune your investment thesis and identify the deals that will work the best for your firm. This means you’ll start seeing a higher IRR on the deals that you go ahead with, with a far more focused approach to finding and winning new business.
Build better relationships
When you have the ability to find target companies early on in their life cycles, this can help you to build trust with them, creating a relationship that makes you the obvious choice when they’re ready to transact. Data gives you insight into the market and the business’s journey so far, meaning you can always go into meetings fully aware and ready to demonstrate knowledge and expertise.
Stay ahead of the competition
While using data to make decisions may now sound like an obvious choice, there are a huge amount of private equity firms who still aren’t taking advantage of it. This means that there is still plenty of scope for you to get ahead of your competitors and find new opportunities before they land on their radar.
Grow your knowledge
One of the useful side effects of becoming more accustomed to the data within your portfolio is that it can give you a huge amount of additional insight and understanding around what’s happening in the market, as well as new and upcoming technologies. You can also follow individuals who are particularly prominent and be one of the first to know if they start a new company or begin working closely with others.
Where to find the most accurate company data
Without wanting to sound too cliche, data is everywhere. There are almost endless possibilities out there where it comes to finding information about a particular company or sector, but finding data that is up-to-date, accurate and reliable can be tricky. Companies House is a great resource for reviewing company data, housing information about every registered company in the UK, however there is no real way of collating and analysing this data on a large scale.
For this reason, many firms turn to external databases that gather information from a number of different sources and bring it all together in one platform.
Beauhurst is one of these, providing an industry-leading solution for private equity firms that are looking for ways to get the most from their data-driven decision processes.
Working with Beauhurst
We have created the BeauhurstInvest platform specifically for investors and accelerators, helping them to identify promising companies early and be the first in line to work with them.
Company data can be reviewed and segmented by a number of different filters, including:
We are constantly adding to and updating our data, with a team of over 60 analysts and data experts dedicated to making it the most comprehensive source available in the UK. Find out more about how you can use the BeauhurstInvest platform to find potential opportunities.
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