Private Equity (PE) firms are facing their own Darwinian dilemma in the digital age; do they adapt and survive in this new type of financial trend towards digital transformation and automation, or do they rely on familiar practices that have worked for decades to conduct business? With the decline of Baby Boomers and the rise of Millennials and Gen Z’ers who demand more information and more transparency faster, PE firms need to quickly pivot to adapt.
This requires PE firms to develop new applications and programs to be able to effectively provide a continual 360-degree view of any potential acquisitions. This automation also can apply to such things as; tax information, enhancing internal systems, developing better systems integration, remaining in compliance, and updating cybersecurity policies. By automating and streamlining the mundane tasks, PE firms could use the freed time and resources to develop better relationships with General Partners, seek out more mid-range markets to acquire, and utilize the time to court new potential investors.
However, this transition can come at a cost. As more information moves to a digital format, the relational aspect of business can be negatively affected—after all, there are certain interactions that can occur over a cup of coffee that cannot be replicated via virtual meetings. The challenge lies in the ability to adapt and blend these interpersonal and digital lines. By successfully pivoting, PE firms can guarantee their future in the market.