How to Find Private Company Information
The digital age has ushered in substantial change in every facet of life—new technology has transformed how we live, interact, and work. This transformation has also penetrated the long-standing traditions of the private equity and investment banking space. Just 10 years ago, in order to operate effectively within these spheres, you had to be a member of the ‘old boys club,’ as it were; deal origination relied heavily upon in-person meetings, insider industry knowledge, and networking. Today, however, many of the previous barriers to entry have been lifted with the introduction of innovative digital tools, such as a dedicated M&A platform and more.
Innovation in Deal Origination
Even with all of these technological improvements, deal sourcing is by no means a simple process, especially when it comes to researching private companies and obtaining up-to-date information. Since data can steer you toward or away from the right targets, it’s incredibly important that you’re using all of the tools at your disposal to uncover relevant and accurate company details. With that in mind, read on to discover how to most effectively find details on non-transacted businesses.
The Issue With Finding Private Company Information
In the seminal military strategy treatise, The Art of War, Sun Tzu writes, “If you know the enemy and know yourself, you need not fear the result of a hundred battles.” Here, the general speaks on the dangers of operating off only partial or incomplete information and the benefits of having a clear picture of the battlefield. A thorough understanding gives you the best route to success.
We can apply that mindset to deal sourcing since it’s essential that you intimately know the company you’re looking to invest in or acquire. Early-stage private investing usually provides the greatest investment opportunity while being the largest type of gamble any investment bank or private equity firm will take. These types of emerging non-transacted companies are usually:
- High risk
- Necessitate long investing time frames
While some non-transacted businesses will be mature/well-established and fairly profitable, many will also be new startups. Investing in newly-budding companies becomes even riskier because there are so many unknowns involved. In either case, there’s likely relatively short track record to go off of and the specifics of their company operation remain shrouded in privacy. Consequently, finding accurate and up-to-date information can be incredibly difficult, regardless of whether you are prepping for tradeshows or a single meeting.
How to Find Private Company Information
At the essence of all your deal origination research lies one question: is the company you’re evaluating the right investment opportunity? The proper answer relies on appraising whether or not the private company is valued fairly, undervalued, or overvalued. An accurate determination relies on your being able to locate a host of measures of business growth such as:
- Growth of employees
- Cash flow
- Product-by-product analysis
- Expense control
- Company trends
- Recent and historic financial figures
- Recent fundraising or past transactions
In the past, finding this breadth of information was no simple task. Unlike the wealth of data available for publicly traded companies, these same details are difficult to access when researching private companies, especially due to the fact that many founder-owned or instutionally-backed businesses typically don’t report company financials. The process often required a mix of:
- Scrubbing lists
- Delving through the company’s web page
- Mining state agency databases
- Searching full-text news databases
- Reading trade literature
- Google research
- Personally tracking down information by speaking with people within the company or within that industry
- Insider knowledge
Today, with SourceScrub, finding information about private companies is a far simpler task. The tools within the tech platform are capable of rapidly performing a Total Available Market (TAM) analysis, enhancing your ability to effectively research market trends. It allows you to pull accurate, up-to-date, and insightful non-transacted business information with but a few clicks of the mouse. What used to take days if not weeks of painstaking research can now be performed in just minutes, providing you with a detailed landscape of the industry and specific players within it.
This platform allows you to:
- Identify non-transacted companies for M&A
- Thoroughly and rapidly analyze a target business’ key firmographics
- Increase market intelligence by proactively tracking the movement of private companies
- Locate founder-owned businesses in their various stages of life
Working Smarter, Not Harder
SourceScrub embraces the concept of “out with the old and in with the new,” especially when it comes to the outmoded data research methods companies once ineffectually utilized to try to find accurate private company information. Now, it’s never been easier to paint a relevant and precise picture of a non-transacted company. By leaning into this new technology, you can save time and money on research while also revealing a more thorough depiction of the investment landscape.
- Tzu, S. The Art of War. http://classics.mit.edu/Tzu/artwar.html
- U.S. Library of Congress. U.S. Private Companies. https://guides.loc.gov/company-research/private
- Bizfluent. How To Research a Private Company. https://bizfluent.com/how-6360482-research-private-company.html