In the nearest future, advanced analytics applied to the right data will drive almost every aspect of how PE firms work and create value with their portfolio companies. Anyway, advanced analytics can be broadly implemented, leveraged and ultimately create value within organisations only if there is a clear analytics and data strategy in place.
“PE firms in Germany are increasingly using data analytics to make investment and exit decisions and to enhance the value of their portfolio companies.”
In Germany, PE firms are increasingly using internal and external data not only to enable better investment and exit decisions and to cope with complex risk structures, but also to create value in their portfolio companies. There is a growing narrative that digital and data enabled business models are more sustainable and resilient in a crisis and help companies to outperform their competitors and achieve higher valuations. This is motivating PE investors to push for data and analytics implementation in their portfolio companies. Not investing in data and analytics is no longer an option.
These trends are further accompanied and amplified by:
- the need to assess and forecast the impact of the Covid-19 pandemic on business performance
- increasing regulatory-driven transparency of the German M&A market
- rising venture capital markets in Berlin, Hamburg and Munich
- a rising awareness that the traditional “German Mittelstand” is just starting its digitalisation and data journey and, consequently, could strongly benefit from data leveraging.
The amount of available internal and external data will continue to expand. The same is true for available analytics technology. Consequently, the ability to get deeper insights, better steering and greater transparency to then create new data-fuelled platforms, services and products will rise steeply too, as will demand for data analytics technology.
“In five to ten years, every PE fund will have analytics and data experts or data science teams working on value creation projects in portfolio companies.”
Of course, the promises of value creation do not come without costs and challenges. There are five main aspects to consider to be successful in value creating with data and analytics: First, defining the goal and being clear about how the analytics and data strategy supports the company’s strategy and digitalisation journey. Second, understanding what data, analytics assets and use cases already exist for identifying and classifying the existing data and analytics assets within the company. Third, assessing resources and capabilities to understand the company’s analytics and data resources and capabilities, compared to its strategic ambitions. Fourth, investing in people, culture, infrastructure and processes in a targeted way that is focused on easy wins. Finally, implementing change and technology step-by-step by choosing use cases that are easy to implement and provide quick wins and a success story, increasing complexity and a degree of of gradual change.
“The willingness to invest in people, infrastructure and processes, and the disposition to change towards a data-centric culture are essential.”
Our dedicated Deal Analytics and Technology professionals have extensive local market experience and expertise in supporting PE firms and their portfolio companies by adopting advanced analytics to generate better customer insights, assess macro-economic trends and optimise supply chain management processes. Our team would be happy to assist you in your next data-driven value creation journey!
