Proprietary Deal Sourcing is no Longer Just a Marketing Claim

Today’s competitive marketplace requires PE firms to explore new strategies to grow the quantity and quality of deals entering their funnel. Proprietary deals have become more challenging in an industry as competitive as private equity, with USD 1.8T of dry powder and close to 20,000 fund managers. Many private equity GPs, even today, claim that two thirds of their closed transactions are proprietary. Dig deeper, however, and you will find that their definition of “proprietary” differs greatly, rendering the term more of a marketing claim than a real capability.  

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How Artificial Intelligence Can Enhance the Three Core Capabilities of Private Equity Firms

Introduction

“…AI and the fourth industrial revolution will impact every aspect of people’s lives.”

Fei-Fei Li, Professor of Computer Science at Stanford University.

Artificial intelligence (AI) has reached a tipping point and is already part of our daily lives. If you’ve used Google Maps to determine the optimal route and transport options, you would have benefitted from the AI powered predictions backed by troves of underlying data. For companies such as banks, machine learning (ML) has also been successfully used to extend loans at much lower default rates and with much greater productivity.

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Can Artificial Intelligence Revolutionize the Private Equity Industry?

Source: xkcd

Introduction

Would you believe us if we told you that artificial intelligence (AI) is as old as private equity (PE), but PE firms have only recently began to leverage the benefits of its use?

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