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Practical Insights (Blog)

How Data Analytics Helps PE Firms Accelerate Value Creation at Due Diligence

Mark McTigue & Jamie Loder

Mark McTigue, EVP Private Equity and Jamie Loder, VP Industry Partner, Private Equity, Europe, discuss why private equity firms are increasingly deploying data analytics to help them buy right and buy smart in a challenging market.

It comes as no surprise that the market for PE acquisitions continues to be robust. Global deal value increased from $594.54Bn in 2015 to $825.77Bn in 2018 and that’s nothing compared with the predictions for 2019.

Buoyed by low interest rates, an eager supply of deal financing and a prolonged period of economic growth, PE has plenty of dry powder and has proved to be resistant to the impact of trade wars, tariffs and political uncertainty. However, not all factors are positive: Valuation multiples remain high and there’s considerable competition among PE firms to find and acquire those elusive “diamonds in the rough.” At the same time, corporate “strategics” looking for suitable acquisitions to support their growth, are offering a viable alternative for firms considering sale.

With these competitive factors, how can PE firms gain an advantage over their competitors, make smarter buying decisions, and speed up the value creation process? The answer lies in operational due diligence (ODD) and the timely use of data analytics (DA) and artificial intelligence (AI) in assessing target companies.

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How to pick winners in a challenging market

PE firms across all industries are increasingly making use of data analytics and operational due diligence to:

  • Identify and screen fast-growth businesses
  • Determine with confidence where the opportunities for value creation lie
  • Quickly identify potential deal breakers and underlying commercial risks

In recent years, we’ve seen a number of data analytics tools emerge which are capable of significantly accelerating the process. These tools allow data extracted from multiple entities to be organized, assembled, cleansed and visualized. AI tools are also able to scour thousands of files and contracts, targeting keywords and clauses, further speeding up the ODD process. This is particularly important for firms with multiple add-ons and minimal integration.

The importance of TVO operational due diligence

Total Value Optimization™ (TVO) operational due diligence, based on a foundation of data analytics, cuts through the noise and gets straight to the facts which sound decision-making is based on. This helps PE firms identify target companies, analyze their potential and implement the necessary cross-functional processes to accelerate time-to-value creation. 

Due diligence provides fast, accurate visibility of the financial information PE firms need. What differs with a total value approach is its ability to identify supply chain and operations-oriented value creation opportunities both pre-and post-acquisition. This enables PE executives to quantify EBITDA improvements together with working capital risks and opportunities. These are coupled with an implementation road map for the first 180 days and beyond with an emphasis on quick wins to support positive internal rates of return (IRRs) in year one.

Driving value throughout the PE lifecycle

While many PE executives are realizing the value of technology throughout the operational due diligence process, less adept companies are continuing down the well-worn acquisition path. In today’s world, this could mean losing out to their smarter and more nimble competitors who are already using data analytics and artificial intelligence to generate and close more transactions, earn higher rates of return, and lower risk.

If you would like to talk about any of the topics raised in this article, please contact one of our private equity executives at: info@mainepointe.com for a no-obligation discussion.


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Calculate the value potential for your businessComplete our TVO Self Assessment Tool ™ and receive an automated Value Opportunity Report. This provides an indicative quantification of the value improvement potential (EBITDA & cash) across your buy-make-move-fulfill supply chain.

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About Us

Maine Pointe is a global supply chain and operations consulting firm trusted by many chief executives and private equity firms to drive compelling economic returns for their companies. We achieve this by delivering accelerated, sustainable improvements in EBITDA, cash and growth across their procurement, logistics and operations. Our hands-on implementation experts work with executives and their teams to rapidly break through functional silos and transform the buy-make-move-fulfill supply chain to deliver the greatest value to customers and investors at the lowest cost to business. We call this Total Value Optimization (TVO)™.

Maine Pointe’s engagements are results-driven and deliver between 4:1-8:1 ROI. We are so confident in our work and our processes that we provide a unique 100% guarantee of engagement fees based on annualized savings. www.mainepointe.com

Topics: Private Equity Private Equity Consulting Data Analytics operational due diligence