How to Conduct Private Equity Research

Private equity firms continue to weather an unstable landscape heading into the second half of 2024, due to the uncertain direction of interest rates and other macroeconomic factors affecting deal activity.

Deal value dropped 60% from its peak in 2021, and deal number has fallen 35% over the same period. On the whole, the sector continues to struggle with deal activity, fundraising, and exit activity. Dry powder—or uncommitted capital in the PE space—remains at a record high of nearly $4 trillion.

The ability to source and discover potentially lucrative opportunities hinges on executing fundamental, comprehensive research and due diligence, especially when conditions are sub-optimal. In this fast-paced, high-stakes environment, accelerating the speed to insights and market intelligence is more crucial than ever.

Below we explore best practices for conducting private equity research with AI-powered capabilities such as those found on the AlphaSense platform. We cover how you can uncover companies that were previously not on your radar, streamline financial analysis, assess landscapes holistically and comprehensively, and get the inside scoop with expert perspectives. 

Surface Companies Not on Your Radar

Getting up to speed on trends and themes impacting the PE space is relevant not only for idea generation, but also to surface companies that wouldn’t ordinarily be on your radar. For instance, a private equity researcher wanting to gauge the traction in the renewable energy sector can start with a simple keyword search on the AlphaSense platform. 

A search for “renewable energy” generates instant results, indicating a surge in private company document activity over the last 90 days.

Within seconds, a simple keyword search can incite idea generation by surfacing the most relevant findings and trends, which can further drive subsequent research and due diligence with greater conviction. 

With AlphaSense’s Search Summary feature, you can take the initial search a step further and hone in on renewable energy startups with the click of a button. For example, let’s say you want to take a closer look at renewable energy startups with Series B funding. By putting “renewable energy series b” in the search bar, you now see the following results: 

From here, you can scroll over a particular company and get a snapshot of their funding, revenue streams, recent news mentions, company documents, expert mentions, and more. AlphaSense’s expansive content library contains more than 10,000 documents on private and public companies, providing crucial market intelligence in seconds.

Streamline Financial Analysis

With AI-driven capabilities, conducting financial analysis for private companies is easier than ever. Traditionally, this task would entail scouring through various platforms, company websites, IR presentations, and proprietary research findings to collect all the information needed. In addition to being highly tedious and time-consuming, this way of gathering information is highly inefficient and likely to miss crucial insights among all the noise. 

With AlphaSense, these manual methods become obsolete thanks to AI-driven automated tools. One such example is Table Explorer allows you to generate a historical lookback of a company’s financial performance, eliminating the need to toggle between different platforms and sources. It also helps to build better financial modeling by digging into quantitative analyses that validate your assumptions and exporting numbers into Excel to assist with historical parts of financial models.

Assess the Landscape Holistically and Comprehensively

Assessing market sentiment is key to building a competitive landscape in the private equity space. The ability to pressure test market conditions and forecasts with vetted and comprehensive content is a key differentiator and means of getting a competitive advantage.

With AlphaSense’s custom dashboards and search capabilities, sourcing market sentiment is an easy task. AlphaSense’s Wall Street Insights® aggregates research offerings from 1,500+ sources in seconds, including Goldman Sachs and Citi, all of which enhance due diligence and help you gain a deep understanding of the market landscape. By running a thematic search across all broker research in the AlphaSense platform, you can easily get a sense for analyst perspective on a key topic for a potential investment.

Additionally, our aftermarket research provides valuable insights into metrics such as operational performance, market size, market share, profitability, growth rate and potential, and competitive position. Custom dashboards and alerts can also be set up as a way to stay informed on funding rounds, IPOs, or potential M&A activity.

Gain The Inside Track with Expert Perspectives

Expert perspectives are an invaluable resource in the PE space to validate potential investments. With AlphaSense’s Expert Insights offering, PE firms can gain a 360-degree view of a potential investment. By speaking with an industry expert with firsthand experience relating to the target company or market, PE firms get unique, differentiated, deep insights into market dynamics, competitors, and potential opportunities. WIth these insights, they can get a better understanding of the landscape that an emerging company operates in and better evaluate its competitive market position.

Our expert transcript library also contains over 45,000 interviews conducted by leading analysts with top industry experts, all of which are filled with unique insights that are key for staying on the leading edge and driving proactive research. 

In a world where data is often scarce and difficult to source, validating investment theses is an important component of private equity research. Engaging with industry experts through AlphaSense’s expert calls and expert transcript library allows investors to validate their hypotheses and mitigate risks

Enhance Your Private Equity Research with AlphaSense

In a landscape traditionally challenged with data accessibility and comprehensive research findings, it is crucial to stay ahead of trends and developments in the private equity space with confidence and ease. AlphaSense’s leading AI-powered market intelligence platform equips you with the insights, market intelligence, trends, and expert opinions to remove the complexity and guesswork from your research:

  • Conduct air-tight due diligence in less time, leveraging powerful AI search technology to instantly surface key insights and metrics on any company, keeping your research on track.
  • Map landscapes with greater confidence and gain nuanced insights on niche industries or companies through a broad range of premium, searchable sources aggregated in one platform.
  • Tap into expert perspectives with access to 40,000+ expert call transcripts, offering exclusive first-hand insights on hard-to-research companies.
  • Locate opportunities using Keyword Search and Smart Synonyms™ to run thematic searches, identify segment-specific drivers, and uncover any red flags.
  • Widen the scope of your due diligence with access to leading aftermarket research from 1,500+ sell-side and independent firms, covering a breadth of companies, industries, and themes.

Learn how your PE research workflow can be streamlined for greater conviction and efficiency—start your free trial of AlphaSense today.

Barbara Tague
Barbara Tague
Content Marketing Manager

Barb is a Content Marketing Manager covering the financial services segment at AlphaSense. Previously, she managed the content program at a global financial services firm.

Read all posts written by Barbara Tague