Alternative data models are transforming the business experience for private equity players.
FREMONT, CA: Alternative data is adding immense value to the private equity space. Uncovering valuable insights that propel better ROI, alternative data broadens the success prospects for the private equity firms.
Private equity space eyes on long term investment, and unlike public traders, individual equity players do not trade in the short term. Thus, alternative data models for private equity firms need to be different than public counterparts. Private equity can benefit from customized alternative data models
that consider various aspects impacting long-term financial performance.
According to a report, 27 percent of private equity investors are using alternative data. Alternative data through the lens of private equity space can comprise various financial and non-financial data about private companies, such as how a company pays its bills, foot traffic data, and credit card receipts. Such data can enable private equity firms to determine whether investing in the company can be profitable or not.
Further, alternative data can enable private equity firms to identify new opportunities, manage their portfolios, and determine the state of affairs in the industry. The other role of alternative data is to enable private equity firms to manage the existing portfolio. For instance, private firms can check if the investment in a business in a particular sector is growing or shrinking.
Thus, private equity firms can significantly benefit from alternative data in the long run.
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