Intelligent automation and analytics in private equity

The rise of analytics and automation in private equity

In the wake of global economic shocks from the COVID-19 pandemic, chief financial officers (CFOs) broadly remain committed to finance transformation. In fact, according to Deloitte’s CFO Signals™ report for the second quarter of 2020, finance chiefs expect a major increase in automation by next year. They consider automation to be a key component of a sustainable finance function for the future.

Investment funds—innovators by tradition—are getting a jump on this trend through carefully chosen opportunities for private equity digital transformation, including intelligent automation and analytics. We’ve seen many start their digital journey in the finance department because of the opportunities for cost reduction, improved forecasting and planning, and more timely financial reporting. Intelligent automation and advanced analytics are often the tools of choice to enhance business processes. These technologies can also support broader finance transformation goals, such as greater transparency into financial performance, reduction of error-prone manual processes, and a central data repository providing a single “version of the truth” to drive more effective decision-making.

For private equity investors (PEIs), the appeal of intelligent automation and analytics takes on an added dimension. It can help their performance management teams identify opportunities to boost the value of portfolio companies by streamlining, modernizing, and reducing costs in their finance operations. At the same time, intelligent automation in private equity can lend greater visibility into the transactions taking place at each portfolio company, equipping private equity CFOs and performance management teams with insights that can shape decisions at the fund management level.

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Seven things PEIs want from their portfolio companies

The COVID-19 crisis has driven home the necessity of operational resilience and cost efficiency in the finance function. In the United States, offices shuttered just as many portfolio companies were closing their books for the prior year, leaving them scrambling to complete the process while working remotely. Now, investors are taking a closer look at how PEIs and their portfolio companies are able to adapt to market changes and stay on a path to growth through efforts that might include:

Any number of digital strategies can help these efforts along. But intelligent private equity analytics are of particular interest because they can support targeted finance transformation initiatives that can produce results within a shorter time frame and lead to a potentially more profitable exit.

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