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Embracing a changing market: Three ways transaction advisory teams can modernize and adapt to uncertainty

Although the economic uncertainty of 2022 is expected to continue throughout 2023, the outlook for private equity remains generally positive, with last year ending as the industry’s second-best year and a record-breaking year for dry powder despite a decline in deals and exits.

However, higher interest rates and other factors are likely to continue to suppress deal activity — especially those higher-value transactions requiring more significant leverage.

With private equity taking a more cautious approach to acquisitions — and possibly strategies focused on smaller, easier-to-finance transactions in 2023 — transaction advisory service providers performing necessary due diligence should plan and invest accordingly. Here are three steps transaction advisory teams can take to modernize how they win and execute more financial and other due diligence services in this changing market. 

Move past manual deal tracking in spreadsheets and presentation files 

Like other financial and professional service providers, transaction advisory teams often struggle to use their firms’ CRMs as anything more than expensive Rolodexes, due to the technology’s inability to track non-linear relationships and deals involving multiple underlying parties or opportunities. As a result, transaction advisory teams have typically relied on a patchwork of PowerPoint slides and Excel files to track their deal pipeline and business development activities related to upcoming or rumored deals.  

With uncertain economic conditions and a potential trend towards a greater number of lower-value exits and acquisitions, transaction advisory teams need quick access to the insights and information required to orchestrate fast-paced business development efforts and (ideally) subsequent service delivery. However, the decentralized, manual ways these teams often work today don’t allow for the agility required to efficiently track and pursue more of the due diligence service opportunities that can arise with each market transaction. Worse, the excessive manual effort required to maintain this operating model for each deal pursuit doesn’t just prevent transaction advisory teams from pursuing and winning more business — it also prevents them from improving time to value for their clients, on whom these teams often rely for future business. 

“Transaction advisory teams inside accounting or consulting firms are often unable to surface insights into relationships, previous work, and relevant experience within the narrow window of opportunity to win a deal,” says Adam Goodman, Practice Group Leader for DealCloud. “During fast-paced deal cycles that involve tight turnarounds for delivery, the deal is done before firms can gather the documentation.” 

Tailored to meet the specific needs of transaction advisory service (TAS) providers, DealCloud helps teams win more business by creating a holistic view of the their deal pipeline; progress  and related activities on individual deals and active engagements; an array of insights from third-party data providers, such as Pitchbook; and previous deal pursuits and engagements with similar characteristics, such as sector or client.

Reduce mundane data entry and workflows

Data entry and upkeep, managed across disconnected working files and systems throughout the pursuit and execution of each deal, are the bane of every transaction advisory team member. As these teams — and the broader firms they sit within — struggle to attract and retain talent, automation of the mundane is no longer a nice-to-have, but increasingly a requirement for firms focused on immediate and future growth. 

Transaction advisory team leaders need to carefully look at their processes and technology to identify areas where they can reduce repetitive data entry and redundant steps in various workflows, so that their professionals can focus on the higher-value work they entered the field to perform. “How and where are we logging and tracking individual team member’s touchpoints with clients? Is that activity easily referenceable in the context of current or rumored deals within our pipeline? How can I more easily cross-reference all of this with insights from the market?” These are the kinds of questions to consider.  

To implement changes that will both improve the daily working lives of their team members and grow the business, transaction advisory leaders will inevitably need to embrace new technology. However, that doesn’t mean they’ll need to completely toss out every tool they’re using today. 

DealCloud creates a single source of truth for transaction advisory teams by integrating data from the technology and third-party sources they already rely on every day. With DealCloud’s collaboration capabilities for Microsoft 365, team members can easily sync and reference data between the Microsoft applications they’re already using and DealCloud. For example, DealCloud’s Microsoft Outlook add-in lets users easily sync updates — such as attachments and calendar events — to new or existing companies’ contacts as well as opportunities within DealCloud.  

Bring your relationship network into focus

Transaction advisory teams build their business on relationship networks that span the private equity industry, yet it can be very time consuming for their service line leaders and partners to stay up to date with the latest data that indicate when it’s time for them to nurture their relationships with specific sponsors. It’s essential that transaction advisory teams stay top of mind with sponsors by improving their collective understanding of who knows whom across the team and throughout the market. This will be especially true if greater numbers of lower-value deals become the norm throughout 2023. 

Yet improving a team’s understanding of how it’s building and nurturing relationships with sponsors is only one part of the equation. To demonstrate greater value to those relationships, it’s equally important that TAS providers can easily identify and organize a deal team that has the appropriate experience and relationships for a given engagement.   

“Once a deal is won by a service line — financial due diligence, for example — work on the engagement must be executed without delay to meet the timetable for delivery of the Quality of Earnings Report and data book,” explained Goodman. “There’s no time to spare for digging up relationship and experience data that’s fragmented across various files and apps like the firm’s CRM. The team needs to be ready to go as soon as the deal is live.” 

DealCloud centralizes sponsor coverage and knowledge management so that transaction advisory teams can create more opportunities, build stronger pitches, and win more deals. By bringing in email activity, event calendar information, and email address data from Microsoft, DealCloud keeps teams on the same page about recent touchpoints or key events — as well as who knows whom (and how well) through applied relationship scoring. By combining this new level of relationship intelligence with insights from previous engagements, transaction advisory teams can become laser-focused on efficiently winning and executing more deals.  

Predicting what the exits and acquisitions market will look like over the next year or so may be difficult, but change is inevitable — and so is modernization. With DealCloud, transaction advisory teams can gain a clear, comprehensive view of their complex deal and relationship ecosystems, alongside detailed workflow and knowledge management capabilities.  

Learn more about how DealCloud can help transaction advisory teams modernize how they pursue business and accelerate time to impact for service delivery. 

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