Leveraging research to improve private equity performance

With tight market conditions and research budgets under pressure, PE needs to deploy its resources as efficiently as possible. Here, we offer some examples of how Third Bridge’s clients use primary research to drive high performance. We align different phases of workflow with the most popular primary research tools, forming an integrated research offering.

This article is taken from our 2023 PE forecast, which can be accessed here

Deal canvassing and sourcing – With the flow of deals coming from investment banks all but dried up, PE firms have dialled up their proprietary deal canvassing and sourcing. This is resource-intensive so a premium is being placed on research providers that can identify suitable opportunities and companies strongly positioned to benefit from secular tailwinds.

Third Bridge launched the expert transcript category over a decade ago with its Forum product. This remains the most comprehensive archive of analyst-led expert interviews in the world. More recently we launched Community, a source of transcribed interviews between investors and industry experts. This gives clients access to expert interview transcripts at a lower price point as well as a perspective on peer investor sentiment.

One of the things we’ve heard from clients is that access to value chain information can be fragmented, unqualified and outdated. This can reduce efficiency. To address this, Third Bridge also offers Maps, a new way to visualise private company value chains in a single view so investors can focus additional research more effectively.

Deal screening

With the PE landscape so competitive, faster deal screening means better performance. PE firms often need to assess hundreds of private companies.

Analysts can now establish fundamental information on privately held companies within minutes using another Third Bridge product, Primers and Tearsheets. These cover all the basics of a private company such as the market drivers, competitive landscape, performance, and growth potential – enabling investors to quickly understand if an entity is the correct fit.

Due diligence and modelling

During the due diligence and modelling process investors need to scrutinise a company’s TAM, growth drivers and competitive dynamics. In practice, this means looking at their structure, suppliers, customers, and competitors. To explore contrarian viewpoints and gain new insights from specialists with direct knowledge of niche companies, expert networks can be extremely useful. Reflecting this, some 80% of respondents we surveyed in our 2023 PE forecast said they use expert networks at the modelling phase. Third Bridge Connections provides direct access to prequalified industry experts through telephone consultations and private meetings, giving our clients unfiltered insights into companies and markets. Experts can be used in conjunction with other investors or taken private.

The deal close stage

Once a deal is closed, PE investors may need to establish a new company board for the company they have bought or replace key personnel. In addition to our telephone consultation and private meeting service, Connections, we also facilitate direct engagements from a huge pool of global experts.

Typical experts are industry veterans with intricate market knowledge and a strong network to lean on: experienced C-level executives, direct competitors, or relevant NEDs. Direct engagements provide access to the talent necessary to refocus financial strategy, accelerate M&A, enter new markets, or transform operational performance.

Portfolio work

Increasingly, PE investors require a clear line of sight over market trends and competitor activity to support bolt-on and consolidation opportunities. Our clients tend to use a combination of our products to reshape their portfolio’s performance profile.

Ultimately, PE investors are faced with a deluge of information and data. Third Bridge’s mission is to help make sense of it all. No other company in the world provides the same integrated research offering.

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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