Private Equity Firms Need to Consider Five Things When Choosing a Primary Research Partner
Get to yes or no faster in your investment decisions
Navigating a corporate purchase requires more than just charging ahead on instinct and numbers. Timing is critical. As more private equity firms enter the market, the need to make informed decisions more quickly has never been greater. A quality on-demand primary research partner will ensure you have the most relevant, exclusive advisory team on deck when you need them, so you can leverage a strategic edge that will help you execute faster and with increased confidence relative to competing buyers.
There are several expert networks and primary research firms in the market that offer human capital. But what should you look for when choosing a research partner? How important are key insights and on-demand services?
In this article, we’ll cover what Private Equity firms should look for when choosing a primary research partner and talk about what makes these companies successful.
Five things Private Equity Firms Should Consider when Choosing a Primary Research Firm
Pick a company that delivers ROI
Here’s the bottom line: On-demand advisory firms should save PE investors time and money. They should help you get to yes or no more quickly and accelerate deal velocity.
Over the last decade, Apex Leaders has scrutinized the unrealized cost of operational waste within private equity investment lifecycle. Across the PE industry, the average cost of funding a deal team for a billion-dollar deal is $10,000 per day. This figure is a relative estimate, but it begs the question: how much does your firm spend each day pursuing a deal? The longer a bad investment drags out, the more it costs the client.
A quality firm cuts unnecessary waste by accelerating the client learning curve by helping firms quickly kill the pursuit of poor deals, freeing up resources to develop an edge early on the investments the firm is positioned to win. They should connect clients with industry experts who help firms develop a deeper understanding of a target’s industry.
PE human capital firms should build the client’s network, not their own. Advisors should work with clients in a way that fits the client’s unique needs, whether that be a one-hour phone call or a long-term partnership with industry experts.
Choose a firm with transparent metrics in place
In a recent study of our competitive landscape, we discovered that 57% of M&A research partners don’t regularly measure their client’s perception of advisor quality. We also learned that only 36% track client satisfaction via a net promoter score or a similar mode of evaluation. Sharing performance metrics delivers transparency that helps PE firms better judge a research firm’s performance and hold them accountable.
At Apex Leaders, we aim to deliver the highest quality advisors in a timely fashion, helping you invest with conviction. Quarterly, we ask our clients how well we delivered on this core promise and consistently earn scores of nine or higher (out of a ten) on customer satisfaction. By choosing a research partner with critical feedback loops and transparent metrics in place, you have a better chance of similar satisfaction results.
Choose a company that knows how to vet advisors
Advisors help PE firms develop the conviction to commit to a deal or walk. The onus of finding key advisors to influence your decision should be on the PE’s research partner, not a high-salaried member of the deal team. They should also fully vet advisors prior to sharing with the client, ensuring every angle of diligence is addressed without wasting client resources.
At Apex Leaders, our process funnels through the sea of information to save clients time. We review hundreds of resumes, trade publications and online profiles, selecting and filtering advisors. We take the time to understand what our clients need and match top advisors to each angle of their diligence process, ensuring a comprehensive industry evaluation.
We make sure clients only speak to the top 1% of potential advisors in their sector of interest. We establish advisor ratings and measure success by how well clients receive focused insight in the least amount of time. A solid research partner should care less about call volume and more about conversation quality.
Choose a research partner that builds your advisor network, not theirs
PE primary research partners should develop impactful partnerships between clients and current industry leaders who can provide consultations for due diligence, portfolio management, board of directorships, and thematic investments. These experts should be cultivated and given opportunities to develop longer-term arrangements, potential board positions and operator roles with the companies that they advise. Apex Leaders makes it easier for clients to construct useful relationships with advisors; once we connect a firm and an advisor we remove ourselves as the middleman so that your firm can build relationships beyond a one-hour phone call.
Furthermore, Apex Leaders uses primary research to find industry leaders who offer unique perspectives within their sectors. We ensure consulting opportunities are highly relevant and beneficial use of everyone’s time.
Apex measures advisor satisfaction by asking three key questions:
- Did we adequately prepare the advisor for the engagement?
- Was our initial process (outreach, scheduling, client conversation) efficient and professional?
- If our client needs assistance with this or future projects, would the advisor be willing to participate?
In all of these areas, Apex has near perfect scores. We provide our advisors with a flexible approach, recurring work and the opportunity to apply their experience in new ways with investors.
The right research partner enhances your business
Private equity firms have many options for choosing and pursuing a deal; by incorporating a research partner into the process they enhance processes and execute faster, with increased confidence. But who they select can make all the difference when it comes to differentiating themselves as a preferred buyer early. Above all, PE firms should look for primary research partners that can consistently deliver quality results.
A recent client helps to sum up everything Apex Leaders strives to deliver to our clients:
“That one conversation with an Apex’s advisor was outstanding! It fundamentally changed how we were considering approaching the market and really, it saved at least six months of my time, because that’s how long it would have taken me to arrive at the same point.”
V.P. of Business Development
PE Portfolio Company providing online language learning tools
For the past eight years, Apex Leaders has connected investment teams with hand-picked advisors rarely found in an expert network. We help them develop proprietary angles and gain an edge on transactions not available to other buyers.
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