Tech Q&A: Data in diligence

Technology poses some of the biggest issues for a modern private equity firm. In the second of four parts, leading tech expert Fleur Hicks describes where data fits in with due diligence.

Fleur Hicks
Fleur Hicks is managing director with OneFourZero, a leading digital global diligence agency, and has spent more than 17 years working with private equity firms and blue-chip brands in the B2C and B2B sectors.

Can technology-driven data ever replace consultants in the diligence process?

The rapid evolution of digital technology now allows us to scrape data in real time. AI provides machine learning that can help disseminate and filter vast volumes of information ever more accurately. An application programming interface (API) feed allows us to access all of this ready-filtered and categorized information immediately in formats that can be exported to reports at the touch of a button.

Technology can be brilliant. But it is not infallible. While it can make a consultant’s life a lot easier, and provide robust information, there can be no replacement for the contextualisation of data. Nor the translation of layered data sets into actionable insights.

There is nothing that can take away from expertise, real-life experience, education and knowledge. And data cannot make an informed investment decision with some gut instinct thrown in, no matter how complex the algorithm. So consultants can and will never be replaced, but technology should be embraced as it can make the process a lot easier and provides much more robust data.

Is digitization changing the way diligence is performed and how portfolios are managed?

Yes, absolutely. Not only are our clients using technology-driven data for diligence and strategy, but the digitization of business is being discussed company-wide. Whether it is related to operational efficiencies or e-commerce, or for acquisition processes or to improve management processes, technology consultants are being employed to tackle a vast array of issues.

Take the example of retail operations. This has implications on a portfolio company level when a network of stores integrates its in-store shopping experiences with app-based shopping, which requires a robust digital technology solution to manage stock, tills, fulfilment and live marketing.

But it also starts to impact at a fund level as the systems are integrated with finance and commercial management. Technology can add to efficiencies and improve the customer experience, and thus must form a key consideration in all the diligence processes as a growth opportunity.