How Top Firms Approach Private Equity Research: Trends, Tactics, and Best Practices
5 Min Read
Private equity is a competitive space, especially for middle-market firms. Deals move quickly, and founders are becoming savvier. However, the firms securing the most deals understand the power of private equity research and use it to their advantage.
Key Takeaways
- Private equity research is a competitive advantage that helps top firms uncover risks, refine investment theses, and secure proprietary opportunities.
- Leading firms go beyond basic diligence by developing sector expertise, building long-term relationships with advisors, and engaging diverse subject matter experts (SMEs).
- Apex Leaders supports this deeper approach through customized research, River Guide (long-term advisor) partnerships, and expert insights that power smarter, faster investments.
Why Firms Dig Deeper with Thorough Research
Surface-level research doesn’t support competitive processes— and rarely does it scratch the surface of proprietary opportunities. Firms that fail to dig deeper into private equity research often fall behind and miss out on prime investment opportunities.
Top firms dig deeper. They partner with expert networks to test assumptions, craft more innovative strategies, and build confidence before they even enter a process.
Here’s how the top-performing PE firms approach research, and what you can learn from them.
They Build Sector Expertise to Stand Out
In today’s competitive deal market, top firms are rising to the top with a research-driven sector development process. The more knowledge and expertise they have, the more competitive they are in a process, and the more value they can bring to the businesses they back.
This is especially true in middle markets where competition is fierce. A compelling vision and industry research help shape investment strategies—and ultimately win more deals.
This matters most in family-run private companies and tenured management teams, where trust plays a huge role. When firms come to the table with a well-researched point of view, they position themselves as preferred buyers and partners—not just another capital investor.
They Rigorously Investigate Industries to Build a Foundational Investment Thesis
Top firms avoid picking an industry and hoping for the best. They do deep research, ask questions, and put pen to paper to develop their thesis. PE firms looking to build a strong investment thesis start by asking critical questions:
- Where does the industry begin and end, and who are the key players across the value chain?
- What defines competition in this space: price, quality, scale, technology?
- How fragmented is the market, and who holds meaningful shares?
- How are AI, tech, or outsourcing reshaping operations or introducing risk?
- What are the typical organizational models, cost structures, and labor dynamics?
- Where have past investors succeeded or struggled, and why?
- Where is the whitespace? What are the specialists doing differently?
The goal isn’t to boil the ocean. It’s to ask the questions that matter in order to identify what drives the competition, understand the risks, and develop a strategy to close the deal. These questions form the backbone of smart private equity research, whether asked by a senior partner or a rising associate building their first sector thesis.
They Employ a Sector-Driven Strategy for Proactive Deal Sourcing and Resource Allocation
Top firms understand opportunities don’t always knock on their door. Instead, they look for them. They draw circles around sectors they want to own and spend time building strategies around them.
A sector-driven approach provides clarity and direction. Instead of being distracted by misguided pursuits, they focus their time where they’ve already found success, identifying emerging trends, and sourcing off-market opportunities that others miss.
This approach also optimizes resource allocation. Firms can zero in on which subsectors to invest heavily, where to spend time building relationships, and which trends to avoid. This approach is a major reason why some firms consistently find better deals faster and is especially powerful in buyout scenarios—where understanding a niche and identifying precise experts can create true competitive advantages.
They Look Beyond Provided Materials, Engaging Diverse Subject Matter Experts to Uncover Critical Nuances
Top firms know there is more than meets the eye regarding a banker’s deck. Rarely is it the complete story.
To paint a clear picture, they talk to the people who know the business—customers, former employees, competitors, and technical experts. They uncover risks that aren’t clear on paper and spot opportunities hidden within.
But, they don’t limit outreach to the executive level. Valuable insights from a supply chain manager or regional sales lead often shift the entire investment thesis.
The firms that lean into subject matter experts (SMEs) understand that listening to the right voices and asking appropriate questions matters. Talking to SMEs and digging deeper than the standard materials allows top firms to test ideas, find nuance, and invest more confidently.
They Cultivate Long-Term Relationships with ‘River Guides’ for Deep Industry Insights
Many PE firms struggle with expert networks that offer surface-level calls but no lasting relationships or sector insight. Top firms don’t waste time on 20 shallow expert network calls when evaluating an unfamiliar industry. They source a handful of vetted SME’searly—and for every deal they’re serious about closing, they engage a long-term advisor, or River Guide.
Typically, these long-term advisors:
- Are former CEOs
- Have run larger P&Ls than the target
- Are your industry point-person
- Refine investment theses
- Assist with deal-sourcing
- Prioritize post-close efforts
- Attend management meetings
At Apex Leaders, we call these long-term private equity experts “River Guides.” They are seasoned professionals with firsthand experience in the sector. With their vast industry experience, they help firms explore investment opportunities while also helping to validate and shape ideas. From early learning through due diligence and post-close, they provide valuable insight on market dynamics, management credibility, and how portfolio companies successfully operate within the space.
Working with Apex Leaders has fundamentally changed how we operate. The people they have working with us are top notch, really outstanding.” –Luke Plumpton, O2 Investments
By building these relationships early, firms give their experts time to understand their style, strategy, and long-term goals. They quickly become credible references, valuable liaisons, and often close advisors who can support the management team and help scale growth after the deal is done.
Apex Leaders: Partners for Private Equity Research
Top firms start any potential investment with deep research, sharp strategy, and partnering with the right experts to guide their decisions.
At Apex Leaders, we help private equity firms do just that. Our rigorously vetted subject matter experts and long-term River Guides, equip your team with the insights needed to refine your thesis and invest with confidence.
Demonstrating a strong, research-backed investment thesis not only helps win deals but also builds trust with limited partners, who expect thoughtful, well-informed decision-making from their GPs.
What makes Apex different from traditional expert networks?
Every expert is hand-picked to meet your needs, so your team can make smarter, faster, more informed decisions.
As Stephen King, Founding Partner at Prairie Capital says, “Today’s market is so competitive, you’ve got to be more than just smart to win. Working with Apex Leaders on a retainer basis gives us the edge on every deal we’re serious about.”
If your private equity research approach isn’t evolving, you risk being outmaneuvered by the competition. Connect with Apex Leaders today to connect with the River Guides and subject matter experts you need to lead the market.