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Private equity steps up its technology adoption By James Williams “What is now proved was once only imagined.� William Blake, Auguries of Innocence, 1803
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he private equity industry remains a staunchly conservative, relationship-driven industry, fuelled by the operational and financial expertise of deal teams to identify the right companies to invest with and transform. It relies on human rationality, and a strong dose of intuition to spot an opportunity in the market; not to mention that rare human ability to look years ahead into the future. This is not something current technology (including AI-based analytics) is predisposed to do, from a deal making perspective, but there is no doubt the pace of technology innovation is beginning to play a more prominent role in how PE firms digitise their approach to investing. 4 | www.privateequitywire.co.uk
In short, technology is becoming an adjunct, an enabler to support GPs, as they steadily modernise their operating model. According to a study by Altvia last year, 39Â per cent of firms said they had implemented technology to mitigate margin erosion in their management companies, closely followed by increased use of outsourcing (37 per cent). It is still early days, but as GPs start to discuss the potential of technology to automate workflow processes, improve fund accounting and reporting, streamline due diligence, and analyse huge data sets (both structured and unstructured), there is every chance PE firms of the next decade will look quite different. Assessing the digital curve The size and provenance of PE groups will influence the extent to which management teams are willing to embrace new technologies and commit capital. Multi-billion dollar TECHNOLOGY INNOVATIONS | Jul 2020
