Private equity and portfolio companies have shared a realisation during Covid-19: a lot of work can be done from home thanks to online technology. To realise both their own and portfolio companies’ full potential in a post-COVID world, PEs will continue pushing for increased digital transformation.
Pivotal to that transformation is what advanced technologies such as AI, IoT, and 5G can do for both PE companies and their portfolio companies.
Using AI in predictive analytics and forecasting is an example of this trend. Challenged by the changing circumstances, companies are struggling to come to grips with what the fallout from Covid-19 means in the long run for both them and their portfolio companies. AI-driven analysis may assist with increasing the accuracy of scenario planning for multiple economic outcomes, with increased flexibility and risk management. However, deciding on how, not to mention where and when, to implement new technologies can be uncertain, uncharted territory.
One thing that is certain is that this is an opportune moment for many PE companies. Vast reserves of dry powder and an increase in available high-quality distressed targets create excellent prospects for new deals. Staying opportunistic in portfolios should be combined with increasing bolt-on acquisitions.
Throughout the deal process, new focal points are appearing. This includes for the due diligence process, where real-time data and deep analytics are playing an increasing role, alongside an increased focus on company resilience levels.
The goal of such undertakings is to help establish accurate valuations. While broad consensus points to technology and healthcare as industries with huge potential, gauging the exact impact of Covid-19 on industries and sub-industries requires in-depth understanding and experience. Something that also applies to the best way to structure new deals and associated tax and debt structures.
BDO’s strong, global team of PE experts assist private equity companies and portfolio companies realise their businesses’ full potential. We can offer a full range of financial services and on-the-ground insight and expertise throughout the more than 160 territories where we are represented.