Article: Navigating Digital Transformation in Private Finance

June 28, 2024


The latest AI-led digital revolution is transforming industries, and private finance is no exception. Traditionally, the sector has been slow to adopt intelligent technologies like machine learning and AI due to the nature of private company data and relationship-driven deal making. However, the landscape is changing. As private sector data becomes more accessible and in-house AI solutions become more prevalent the competition will intensify. Companies that successfully integrate the latest technologies across their processes, from sourcing to execution and integrations, will secure a significant competitive edge. Thus, in this month’s insights, we explore the right starting points for digital transformation in our industry from leadership to technological maturity and navigating cultural shifts when adopting new technologies.

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Secure Management Buy-In

Digital transformation projects bring change to every level of the organisation or division where it’s carried out. Without management's willingness to take the lead, projects are unlikely to succeed. A recent McKinsey study highlights the importance of tech-savvy leaders on the management team for successful transformation. Equally important is management's commitment to success and a willingness to develop how the company operates with new technologies. When both senior leaders and project managers are involved and committed, the chances of success increase significantly.

Set Clear Business-Driven Goals for the Transformation

Digital transformation isn't about fundamentally changing how private finance transactions are carried out. M&A is still a relationship driven business, and teams will still source opportunities, manage projects, and ensure their acquisitions' success. However, the key differentiator for success will be enabling better access to private company data, faster analysis, optimised project management, and capturing valuable lessons learned both from successful and unsuccessful M&A projects.

Before initiating any digital transformation project, it’s essential to establish a clear, business-driven strategy with well-defined objectives, priorities, and timelines. Today’s technologies create opportunities for transformation at any stage in the M&A lifecycle, from deal sourcing to execution and integration, as well as analytics. For long-term value creation and project success, the only viable approach is to include every step of the M&A lifecycle in the strategy. Adopting new technology simply for the sake of being “cutting edge”, or to apply a “band-aid” solution to a single problem is only going to cause more pain in the future. A comprehensive approach helps avoid major pitfalls such as poor data collection and utilisation. 

Ensure Your Data is Ready

A system is only as good as the data it processes. While new data entering a new system in a structured and standardised manner will be ready for utilisation from day one, legacy data from systems often poses a challenge. Existing data is rarely in a directly usable format - after all companies go through the digital transformation to improve data usage - and will need significant work to transfer it into the new, usable format. To alleviate a lot of this pain, companies should do a thorough data audit to identify what data they want to transfer and which format it is in, and additionally choose a digital transformation partner who understands the pain and is able to work with their bespoke requirements.

By ensuring you are able to migrate your data as quickly and as efficiently as possible, users will not need to use two systems simultaneously, and are much more likely to see the benefits of adopting new technology.

Create an Environment for Adoption

Adopting new technologies never comes without cultural changes to the company. The larger the organisation, the more diverse are the attitudes and perspectives towards adopting new technologies. Keeping every level in mind, here are some of the key factors in reinforcing the change across the organisation:

In conclusion, digital transformation might seem like a purely technological shift. But, when the goals and processes for adoption are clear and we know our maturity for adopting new technology, it becomes evident that technology is not the change itself, but a catalyst for improvement across all stages of private financial transactions, from sourcing new opportunities to carrying out acquisitions and integrations.

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Authors: Eljas Pajamies, Matthew Jones

Photo: Joseph Corl

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