How Private Equity firms can best conduct a cross-portfolio software inventory -Private equity data collection

We've prepared some general advice on the private equity data collection process of collecting software contract data from portfolio companies. I have experience on both sides of this process, on the PE side trying to collect data from portfolio companies on behalf of clients, and also on the portfolio side, being the IT owner at a company where I would organize data for the PE firm that owned us. 

If your PE firm has not yet gone through a spend-gathering exercise with the portfolio (building a spend cube, for example) there may not be an established point of contact at each portco to send these requests to.

It is best to start at the top, in this case with a CIO or VP of IT. That contact can delegate the pulling of contracts to a manager within the team, as they will not likely know where to pull the contracts from in the system.

I would structure the request in a way that is simple as possible, but specific enough to avoid duplicate requests. Below is an example:

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At XYZ Capital we are working on a strategy to provide augmented support to our portfolio companies in the space of technology procurement, as it is consistently a top ranked category in annual indirect spend. Your participation in the data collection will allow us to better support your firm with software price benchmarking and our negotiation of cross-portfolio framework agreements that will provide access to improved discounts and terms made available at the PE level.

Please provide PDF copies of the final, executed versions your top five (5) active software contracts measured by annual spend. Please also include the MSA (master services agreement) for each of the contracts if it is in a separate document.

If you require urgent negotiation assistance with any of the contracts being sent over, please let us know and we will prioritize the review of those contracts.

Please provide the above information by X date, when we plan to conclude the data collection.

Please include all attachments in one reply to this email if possible.

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This can be done by email if your assistant is able to monitor the responses and organize the documents into a folder. It can also be done by making a survey with a file uploader, but this can complicate things as the link needs to be accessed by various people in each org and would have to be saveable, etc. (OneVolume is working on a secure module to support the data collection process, stay tuned!).

Business professional analyzing digital data trends and files on a laptop, with graphs and folder icons representing organized information management.

What I've seen other PE firms do is ask for the files but also ask the portco to populate all the key information (total contract value, expiry date, annual value, notes on each contract, etc) but this is where the collection can start taking months, and you are likely to end up with inaccurate data.

Once you have the contracts the next step is to work towards a prioritized list of opportunities based on the expiry dates, total contract value and urgency. You can do this manually in excel, or you can bulk upload the contracts into OneVolume to extract all relevant contract data, and create a comprehensive cross-portfolio benchmarking database in minutes.

Hopefully this is helpful - please reach out with any questions.

Ian McDonell