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  • Writer's pictureMart Lumeste

Navigating Current Realities in Private Equity Investment with Sonar Profiler

The Current Reality


In light of the current economic situation in the private equity (PE) investment landscape, a recent study published by Bain & Company reveals significant challenges and declines in various aspects of the industry. During the first half of 2023, buyout funds globally saw a staggering 58% decline in deal value, amounting to $202 billion, compared to the same period the previous year. This annualizes to a 41% drop, projecting a total of $403 billion for the year, significantly lower than the total in 2022.


Several factors contributed to this decline, including buyers and sellers experiencing uncertainty amidst macro challenges, difficulty in obtaining loans due to rising interest rates, and economic uncertainty leading to a decrease in syndicated loan issuance for large leveraged buyouts. Despite slower dealmaking and fundraising, a significant amount of uncalled capital (dry powder) at $3.7 trillion is available. This huge pool of available capital presents a ticking clock for PEs to put this money to work and generate returns.


Overall, looking at the current situation it is clear that the fund managers and deal teams, being under such pressure, are in need of new and innovative tools to help them handpick the winners on the market and stay competitive while doing it.


Our Approach to Technology


Here at Intium we live and breathe technology and innovation. In the context of developing an automated technology due diligence (DD) tool - Sonar Profiler - we have been talking with a large number of investors to deep dive into their work processes and understand how data is being gathered and used in their practice. For this paper, our methodology included interviewing the PE funds in a show-and-tell format and validating or invalidating the assumptions we had made about the processes and the funds’ needs.


Essentially all funds understand that there is a need for more efficient tools that help them gather data faster and more efficiently at an earlier stage in the investment cycle, and more importantly to make sense of the gathered data. In many instances, we also touched on the competitive bid process where it becomes even more vital to access the right data when there is still no exclusivity on the target. It was also evident that value creation is definitely one of the key areas to look into already at the very early stages of the process. Fundamentally, not having the right information at hand might wreck some opportunities for building the best value creation pathways.



Screenshot of Sonar Profiler


What The PE Funds Are Looking For


When talking with the PE funds, we identified some clear winning factors that matter to PEs and help increase the firm’s efficiency, win the bid process, or develop the initial value creation strategies. In fact, 86% of participants found that comparing the target against any competitor, industry-standard or existing portfolio company, allows them to fulfill their goals. By leveraging benchmarking data, PE funds gain valuable insights into the strengths and weaknesses of their target, identify red flags and possible areas for improvement, and seize opportunities for developing a strong competitive advantage. Our commitment to providing robust benchmarking through automated software aligns with our mission to empower our clients with the tools needed to make strategic decisions and excel in a dynamic market.


One of the unique features of Sonar Profiler is the provision of tailored management meeting questions, specifically developed based on the areas of concern identified on the target. We were delighted to learn that 57% of the participants found these bespoke questions to be of immense value. These customized questions enable our clients to dig deeper into the critical aspects of their investments, facilitating a more thorough conversation with the target and uncovering insights that might otherwise remain unnoticed. Of course, it is possible to combine the questions with a pre-existing list that funds usually have as a by-default option at hand. By incorporating these tailored questions into management meetings, funds can make more informed decisions and maximize the potential of their investments.



Screenshot from Sonar Profiler


Following Through The Full Investment Cycle


As mentioned before, the core of Sonar Profiler is a streamlined process-led approach that gives the funds back the power that technology and data can actually offer them. 100% of the participants confirmed that we have a similar understanding of the investment cycle and their process. The funds also appreciated the fact that we support them throughout the whole process - from screening - until exiting the asset. As a result, it streamlines their decision-making process, reduces complexities and costs, and enhances the overall efficiency of their operations.


In addition to early-in-the-process technology-related data that is presented in a language that is understandable by business professionals, as part of our holistic approach, we also provide in-depth insights into the target’s technological strengths and weaknesses at later stages in the dealmaking process. One example of this is the Open Source Software (OSS) Scan. OSS is an automated scan providing a high-level overview of potential vulnerability and license risks; being typically applicable for software product and/or service-driven companies outlining risks pertinent to the codebase. The scan can be consumed independently or as part of a detailed technology DD report.


Final Words


In conclusion, the current economic situation poses challenges for PE funds, but it also presents an opportunity to leverage technology and innovative software solutions. Embracing these technological advancements empowers fund managers to make better investment decisions, increase operational efficiency, and ultimately stay ahead of the competition in an evolving and demanding market.




Intium is a tech advisory, focusing on tech DD and value creation. We work with PEs, strategic investors, and portfolio companies helping assess software and tech-enabled assets. Our state-of-the-art value creation portfolio can help harness today’s technology advancements and assess current technological premise for maximum efficiency achieving the best possible value.


If you are interested in working with us in automating the technology DD process and gaining exclusive access to the private beta of Sonar Profiler, feel free to contact us at intiumtech.com or directly via contact@intiumtech.com


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