A faster way for investment teams and M&A professionals to identify actionable investment opportunities
Preqin, the global leader empowering the alternatives community with essential data and insight, announced the launch of Actionability Signal. Preqin’s latest innovation helps investment teams and M&A professionals fast-track their deal-sourcing activities by identifying companies that are likely to be open for investment before this information is publicly disclosed. In other words, when the firm will become ‘actionable.’
The launch of Actionability Signal comes against the backdrop of a decline in global private equity exit volumes and venture capital fundraising due to market headwinds. In this challenging environment, investment teams need better insight into companies that are likely to be seeking investment or strategic alternatives to stay ahead of their peers.
Actionability Signal represents a significant update to Preqin’s market-leading solution (Company Intelligence) that helps investment teams and M&A professionals investing in private markets streamline their top-of-the-funnel deal activities.
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Private equity and venture capital exit values marked by declines
According to Preqin analysts*, global aggregate private equity exit value reached $99.9bn by the end of Q2 2023, a 27.7% decline since the same quarter last year. This trend is in part linked to the impact of the post-pandemic stimulus measures waning. Therefore, the velocity of funds flowing through the private equity market has markedly declined. Adding to this, the poor IPO environment has contributed to a particularly steep drop in exit values.
For venture capital, the number of exits and aggregate exit value at the end of Q2 2023 are 30.6% and 33.0% lower than their five-year quarterly average, at 419 and $52.9bn, respectively. Additionally, fundraising remains tough for fund managers looking to raise capital. The number of funds closing has been on a downward trend over the past six quarters, albeit with a slight uptick in the fourth quarter of 2022. Aggregate capital raised has followed a similar trend, with 219 funds raising $26.1bn by the end of Q2 2023. Investors remain pessimistic but continue to deploy capital, although less than in the recent past.
Preqin’s latest update provides a rapid and reliable assessment of a company’s actionability
As shown above, these are times of market uncertainty where it is difficult to access critical asset performance insights in opaque private markets. And so, investment teams and M&A professionals need additional support to gain a competitive edge.
Responding to this demand, Preqin launched Actionability Signal, a proprietary tool that anticipates the likelihood of a company undergoing a liquidity event in the next 6 to 18 months.
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Preqin’s latest innovation is powered by machine learning and analytics techniques applied to millions of data points, providing insights into a company’s actionability. The data analyzed includes company-level information such as the size of previous funding rounds, staff percentage changes, fund age, previous deal stage and much more, as well as aggregated information on holding periods across locations and sectors.
Thanks to Preqin’s Actionability Signal, investment teams and M&A professionals are now able to further reduce uncertainty in the deal-sourcing process and make better-informed decisions, faster.
Fund managers can get recommendations on early- and growth-stage (up to Series D) companies most likely to be raising capital in the next 6 months. They can also get early insights into companies held in private equity buyout funds that are most likely to be sold in the next 12-18 months. At the same time, service providers can get help with their various business development activities. As an example, M&A teams at law firms can now refine their business development pipeline by identifying companies that might be exiting soon to offer their legal services.
Sola Akinola, EVP, Head of Company Intelligence, at Preqin says, “In today’s challenging environment, our clients are increasingly looking for ways data can help them maximize their time to focus on the opportunities that matter. With Actionability Signal, we are making identifying actionable investment opportunities a much faster process by harnessing the technological advancements and power of Preqin data and machine learning.”
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