The use of data in public versus private markets is night and day. In public markets, people can access new data points that influence investment decisions in nanoseconds, yet in private markets, people are still fighting to extract data from PDFs.

While private equity, as a rule, has been somewhat slower to leverage data and realise its full potential, it has long been recognised that utilising it provides a competitive advantage. Indeed, many PE firms have brought in data experts to support their value creation activities at their portfolio companies. While there are certainly exceptions with some pioneering the use of data analytics within their investment processes, the adoption within private equity firms’ own operations has generally been slower and limited to the larger players.

This is changing driven by greater complexity and technological advancements, and firms of all sizes are increasingly looking at how their processes and operations can be improved through improved use of technology and data. According to a recent survey of alternative asset managers, the overwhelming majority said analytics will become much more important to their firm in the next three years, with over a third saying it will become transformative*.

An abundance of factors are influencing today’s investment landscape. While the decade following the Global Financial Crisis was marked by relative economic stability, tectonic shifts in global politics and economics in recent years are forcing firms to deal with new challenges, more volatility and an ever-faster pace of change.

At the same time, there is greater demand on private equity firms for all manner of data – particularly from limited partners and regulators. The growing focus on ESG is one factor. Dealing with data requests from LPs, regulators and other stakeholders can account for most of a firm’s data-dedicated resources and providing that data can be a significant challenge.

Interest has been fuelled further by the recent discussions of – you guessed it – Artificial Intelligence. AI is suddenly on everyone’s radar and people are searching for new ways to deploy it to save time, bolster their decision-making, and gain a competitive advantage.

Many firms are right at the start of their data journey, which can be an advantage if they are unburdened by legacy systems. Wherever you are in that journey, however, private equity firms that are truly able to harness data to inform decision-making, will have the competitive edge.

For any firm looking to become data-driven, and make their data more accessible and insightful, we’ve summarised the key areas to focus on in this whitepaper.

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