PEWlive Technology Summit – Day One: The challenge of striking the right balance with tech
Private Equity Wire’s Technology Summit kicked off on Wednesday, an event that will look at how digitisation and the adoption of new technologies are shaping the world of private equity and some of the future trends in private equity tech.
The first panel of the day, ‘Future Trends in PE Technology’, saw Ron Biscardi, Jamie Smith, Sophie Flak, Jed Gardner and Eric Feldman, discuss some of the most salient trends emerging in PE and tech, which was followed by a data analytics panel.
The second panel of the day went on to cover how the need for quick execution in the secondaries space could be the reason you would win a deal or not today, according to Tobias True, partner at Adams Street Partners.
Analytics and data provider SS&C Technologies’s Michael Megwa agreed and underlined that after collecting data it is vital to look at: 'is this data correct?'.
In the same panel Sajjad Jaffer, senior director at West Monroe Partners, mentioned the importance of value creation when it comes to a deal that could have been a 2x exit, and instead turning it into a clear path towards a 5x return.
“If you take the entire transaction data, and start looking at the granular dispersion between the best and the worst performers, best customers/worst customers, best products/worst products and apply statistical AI-based approaches to convert your worst in to best in terms of repricing, elasticity, etcetera, you have a clear roadmap now to drive incremental value for operational improvement in the business,” explained Jaffer.
Meanwhile, True acknowledged the importance of leverage and sectors. “For us, the ability to understand leverage and not just the amount of leverage at a company or a fund but also the type of leverage is vital; what’s the credit quality and so on?” he said.
“From a data management point of view, the ability to understand - how much leverage do I actually have? is important. Without the leverage data we would be pretty lost,” added True.
He continued: “Now the challenge will become striking that balance between the speed of having data and appreciating the part of the investment process that cannot be quantified. I’m not sure what that ratio is, but I know that it will never be a completely quantitative industry. There is a danger of trying to over quantify things and make decisions purely based on some kind of historical fit. You have to understand how people make decisions. Do people truly respect other people, their operating partners?”
The last panel of the first day of the event was themed around accessing the cybersecurity landscape.