Over the last few months, countless articles and reports published by Boston Consulting Group, The Economist, The WSJ and Forbes all sounded the alarms about a particular narrative: changing macro conditions are forcing a new reality on the private capital markets and the professionals that work in the industry. Now, placed not-so-delicately on top of these trends is the current COVID-19 virus and the panic and disruption that has come along with it.
Whether it is the rapid influx of investable capital from non-traditional sources driving up asset prices, to a rapid expansion of new fund managers, or a growing bifurcation between mega funds and specialization funds, competition in the private capital markets was never more intense… and is now coming to a screeching halt. Or is it? While the experts attempt to predict the macro changes dealmakers can expect to experience in the years ahead, there is little being said about how private capital markets firms should differentiate themselves in this new reality, leaving much to be desired by the firms being impacted by the trend.
We here at DealCloud believe the answer to this involves leveraging technology to capture, display, and report on your proprietary data. The reason for this belief is that no matter the market forces at hand, your proprietary data represents both the strength of your relationships and your operational expertise that separates you from the fund you’re competing with.
One of the ways our clients are leveraging their proprietary data is by aggregating their historical deal flow and utilizing that to prioritize and maintain key relationships. Our clients are applying this practice across all of their deal and capital sources. See below for relevant examples:
Our GP clients are aggregating their historical deal flow and applying a total and average intermediary score to tier out their banker relationships to help maintain their priority deal sources.
Our Investment Banking clients are taking their priority Sponsor relationships and tiering them out based on historical deal flow and success rate. This process allows our clients to be more effective in their deal marketing, pitches, and auction process.
Our Sponsor-backed lending clients are tiering out their top GP relationships by deal volume, close rate, and fund size to surface actionable relationship data and ensuring that they have a consistent cadence with these sponsors.
Our clients are also applying this tiering strategy to their Limited Partners and based on tangible data such as total fund commitments and co-investment history.
Whether you’re a brand-new fund or have been around for 100 years, we know you’ve worked hard to develop relationships, establish your brand and hone your operational expertise. DealCloud has partnered with over 800+ firms in the private capital markets to better unlock that proprietary data to establish an informational and operational competitive advantage in the marketplace. If you’re interested in learning more about how we are partnering with firms to keep them one step ahead, click here.