Enhancing PE Firms Due Diligence

How private equity firms use Seerene to boost their ROI

Private equity (PE) firms use Seerene in two distinct areas: pre-investment and post-investment. It can be used in conjunction with individual companies, or across a PE firm’s portfolio. In this post, we’ll look at how PE firms use Seerene pre-investment.

Without Seerene, PE firms have limited insights into meaningful areas of software development. Technical diligence processes are typically built to look for open source exposure, “analyze” subjective observations about technical debt, and review anecdotal evidence about key people. Seerene lets PE firms take this process from a paper plane to a rocket ship.

With Seerene, a PE firm can use fact-based KPIs to understand many factors, including performance, risks, and the return on technology spend:

1. Innovation: How much innovation has a firm really done in the past few years? With Seerene you don’t have to rely on PowerPoint presentations and anecdotes. Seerene shows you the precise amount of money invested in innovation versus maintenance and bug fixing. You can see how much time they’ve spent wrestling with outdated, complex code. That provides more precise valuations.
2. Impactful technical debt: Technical debt has many meanings, and at Seerene it refers to impactful technical debt (ITD). This revelation is critical when valuing a potential acquisition or looking for ways to reduce costs. ITD slows programmers down and costs companies money. If you eliminate or reduce ITD, you will save money. In a company with 200 programmers Seerene can typically identify $2 M per annum in cost savings. That allows you to comfortably bid more than your competition, knowing with certainty that your return will be bigger than theirs.
3. Key people: Many acquisitions have been hurt by key people walking out the door. Most technical diligence processes wade through data that is largely anecdotal and not insightful. In stark contrast, Seerene provides you with precise, focused data about which programmers are key. Wouldn’t you want to know which programmers have critical knowledge you can’t afford to lose? Or which ones are truly productive programming superstars? Armed with this knowledge, your bids will also have less risk and greater returns.

Having information about innovation, ITD, and key people is a game changer for investment strategies. With more transparency, a PE firm can increase its ROI and lower its risk. It’s RAROC made better.

In my next post, I’ll explore how PE firms use Seerene’s platform to better govern their portfolio companies in the post-investment phase.