How Asset Managers become better Deal Makers

If you cannot track them, you cannot measure them

Anonymous.

Private Markets for deals in Asset Management have become extremely competitive. There is more capital in the market than deals, and managers are often chasing similar opportunities. There are fewer proprietary deals… Check for numbers here

Manual (Excel is still “manual”) deal tracking processes invite sloppiness, risk losses in the portfolio, and cannot be approved on systematically. So what do 63% of Private Capital Managers do — they use “manual processes” to manage deals in the pipeline. They have a good excuse for not using all that tech providers have offered.

1. Oh! the tech is too expensive
2. And difficult to use
3. Does not integrate with my other enterprise systems
4. I know every deal like the back of my hand

We agree with facts #1 to #3 and, are not super-human enough, to get #4. But here are some other observations that our clients have made:

1. Good deals were not just dumb luck, but happened because the managers sourced them, worked on them diligently and made sure they were fully prepared, with every fact of the deal.
2. They made the deal process extremely efficient. They knew which deals they had in their pipeline and what was lacking. They knew which deals got stuck at which stage, and how to move them forward. They could track who were their better partners and who were time sinks. It gave them a great view into what was working and what needed to be improved. They were proactive on the ‘mission critical’ alerts.
3. They often tinkered with the different stages in managing deal pipelines. Every Asset Manager had its own “Deal Stages” and an ability to create a fine tuned process for each stage. And obsessed about keeping all their records together. Managers mentioned that they spent time on a deal’s progress looking through its progression page.
4. Automating the deal tracking process greatly increased the quality of deal making. Some features they identified that were of big help included Automatic reminders, email integrations, and ability to add Notes to every deal. Deal metrics helped reduce time to close a deal, and made each team member more responsive.
5. The archive of dead deals became a rich repository of market information, that they were able to leverage for doing new deals.

Most managers who had adopted Deal Tracking systems would not go back to their old ways. It greatly enhanced their ability to identify better deals and added significant values to their portfolio.