Top 5: due diligence software in the private equity investment sector
2 min read

Top 5: due diligence software in the private equity investment sector

What is due diligence?

Due diligence means different things in different sectors. The dictionary’s view is that due diligence is: “a comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential”.

In essence, it concerns double-checking information and making sure any disclosures made in a – usually commercial – process are correct. This information may cover the identity of individuals involved, the legal status of a company, and so on.

Why is it important?

In private equity (PE), high-level due diligence is essential to be sure of every aspect of the deal. Speed is also of the essence. The due diligence must be completed before another organization creates competition for the transaction, or the prices rise, and the opportunity is gone.

Many companies within the PE sector simply don’t have the time to do proper due diligence.

Traditionally, investors acted on ‘gut feel’. This is a hazardous strategy as we can be blinded by the need to succeed and may miss or ignore vital information. Alternatively, confirmation bias may lead us to find the answers we want from the available data. These can affect the decision to buy or reject a company. Getting it wrong can prove to be very expensive.

There must be a better way

Most PE firms use at least two individuals to check every piece of due diligence data. But this is not only costly in terms of man-hours, but it is very slow and therefore costly. And the possibility for human error remains.

It is for this reason that due diligence software has become more prevalent in PE. Far more data can be analyzed more quickly, without any danger of the computer being swayed by emotion.

The software can significantly reduce this lengthy and expensive process to more quickly deliver more accurate data in order for PE professionals to be confident making the right decisions.

The solutions

Below are the top five software programs used by PE companies:

Logic Manager provides a quick analysis of a company’s legal, ethical and financial situation. It gives an unbiased opinion about the whole organisation, providing a department-by-department analysis, if required. Users also have full access to a consultancy team that can provide an external view of the situation.

Cost - on request

mnAI is a software and data solution company for PE corporations. The due diligence software helps PEs with target identification and deal origination on a single, easy to use platform. mnAI uses that latest technology with millions of data insights and the latest information to provide the best answers to identify market opportunities. It also offers a watchlist and monitoring of the industry.

Cost - on request

Datasite provides private equity due diligence software. It is already in use within major PE firms. Users can create unique systems by splicing due diligence software to meet their needs. It flags up issues and risks, immediately providing the user with a better foundation for negotiation or whether to proceed with your investment. It saves time and time is money.

Cost - on request

DealRoom helps the user by identifying places to look, raising potential problems and offering questions to ask quicker than any human could.

Cost

Single - Single project, Unlimited users, 5GB data storage = $1,000 per month.

Professional - Unlimited projects, Unlimited users, Pipeline management, 20GB data storage = $2,500 per month.

Tech Miners mine information from companies. The company specialises in technology due diligence for private equity and investment capital. They rely on word of mouth to spread their achievements and receive strong customer endorsements. Tech Miners claim to not only raise issues, but offer a deep review, providing analysis and recommendations.

Cost - on request