In 2021, the private equity space saw a record of global funds raised at $1.2 trillion, or a 14 percent increase from 2020.
As the industry grows and the competition rises, firms are looking for new ways to differentiate themselves, become more efficient with their resources, and hone their competitive edge.In this field, it’s necessary to make quick, data-backed decisions ahead of the competition. Staying on top of the latest developments in the market is not an option—it’s a must.
Here is where AI comes into the picture for decision making in private equity.
Challenges in Private Equity Research
Market research for financial professionals in private equity is extremely challenging:
- The flow and access to information in private equity is not as straightforward as in the public sphere, even though there is more data available today than ever before.
- Manually collecting and analyzing data is a time-consuming task that can bog firms down and delay decision-making.
- Discovering and identifying startups that show potential or already have thriving operations isn’t easy and gaining access to this information is difficult.
- Performing due diligence on potential investment targets companies to determine if they are worthy investments is another challenge.
- Financia firms must find a way to process data and provide meaningful insights into potential target investments as part of their long-term investment strategy.
The conclusion is that private equity market research tactics must supersede the traditional tools that no longer provide an edge in today’s markets.
AI-Powered Sentiment Analysis in Private Equity
Natural Language Processing (NLP), one of the fastest-growing sub-segments of AI, is growing in popularity among financial institutions. Citizen Data Scientists, such as analysts and researchers, are using NLP to extract meaning from unstructured text data.
One specific capability of NLP is revolutionizing how firms can monitor and analyze the news: Sentiment Analysis, which helps financial services firms, especially with private equity market research, quickly gain accurate tone sentiment and real-time indicators on the market from news stories without having to comb through each piece of information manually.
Sentiment Analysis can help with:
- Faster Deal Sourcing
- Automated Real-Time Insights
- Reduce Risk in Private Equity Investment Decisions
Faster Deal Sourcing
Using AI-driven NLP Sentiment Analysis, private equity firms can quickly understand the accurate emotion and meaning behind unstructured news and text information to gain market insights, identify new targets, perform accurate due diligence, and monitor portfolio company news stories for better decision-making.
By automating the analysis and research, private equity firms also save time that can be used perform value-added activities like meeting with portfolio companies or presenting to clients.
Automated Real-Time Insights
Millions of new businesses that emerge each year, in addition to the millions that are already established and looking for investors.
Sentiment analysis can provide real-time updates and sentiment indicators on the overall market, specific industries, or companies.
Reducing Risk in Private Equity Investment Decisions
NLP Sentiment Analysis work around the clock to do private equity market research that provides real-time updates using the latest information.
These models lead to increased efficiency and better deal-making and decrease the risk associated with an investment.
Accern NoCodeNLP Platform Powering Private Equity Decision Making
With the Accern NoCodeNLP Platform, private equity firms can drive faster and better investment decision making with NLP Sentiment Analysis. With no technical knowledge, an analyst or business expert can determine the news sentiment around recent developments or announcements and quickly make informed investment decisions.
Watch this 3-min video to see how asset managers can leverage the Accern NoCodeNLP Platform to receive fast and accurate insights from text data to fuel timely investment decisions.
Using the pre-assembled data sources – global news and public data and content from leading data providers including FactSet, Morningstar, Dow Jones, Naviga, and more – users can build NLP models with historical and real-time information.
Schedule a demo to learn more about the Accern NoCodeNLP Platform and how it can help drive ROI for your private equity investment portfolio.Share this Post!