Private Equity

How can placement agents reduce non-revenue generating tasks?

The use of placement agents in private equity has increased as allocations to the asset class have sky rocketed. Diligend offers placement agents a digital due diligence platform to help them automate the DDQ and RFP response process for clients.


The private equity sector has experienced a huge boom in the past few years, with institutional investors now seeing it as an extremely lucrative area of investment. This has led to a surge of private equity firms, alongside an increase in the number of placement agents. Figures show that in 2021, private equity placement agent fees were worth more than $9 billion globally.

The placement agent sector is booming

The percentage of private equity firms using placement agents is also at an all-time high of 84%, with the majority of firms (62%) using them on a regular basis. This is up from just 38% in 2006. Private Equity International reported at the end of 2021 that some GPs were even using multiple agents to fulfil bespoke needs. The use of placement agents has become so commonplace that many firms consider it a necessity in order to compete.

Placement agents are widely used in Europe, particularly Germany, Denmark and the Netherlands, (although the use of such agents is banned in France) and are playing an increasingly important role in the US placement market.

What value do placement agents bring?

Placement agents add value for private equity firms in many ways; Firstly, they have a wide network of potential investors, which can help a firm to reach a large number of potential investors quickly. Secondly, placement agents have significant expertise in the private equity industry and can advise on fund structures, marketing strategies and deal sourcing. Finally, they act as a buffer between private equity firms and the investors, which allows fund managers to focus on deal-making without worrying about investor relations and fundraising logistics.

As the private equity sector booms, placement agents too have seen an increased need for services that include;

  • Research and analysis of the private equity market
  • Identification of potential investors
  • Preparation of marketing materials
  • Coordination of roadshows and investor meetings
  • Negotiation of terms with investors
  • Closing of investment commitments

Placement agents and due diligence

Placement agents also respond to investor due diligence questionnaires on behalf of the fund managers they represent. This can make the process of raising money much easier, as fund managers do not have to spend time and energy answering these questions themselves.

Managing numerous DDQs and RFPs is time consuming and detailed, however, and this is where Diligend steps in.

How can placement agents streamline the due diligence process?

From our work in digitizing the investment management due diligence process, we understand the many challenges placement agents face when completing DDQs on behalf of clients. With multiple clients and multiple investors, there are a myriad responses to complete within tight timescales. Investors may request the same information in different formats. It can be tricky to collect data from across the clients' organization and service provider network within the deadlines set. You must also maintain the latest responses and ensure everyone accesses the correct information.

Diligend Respond digitizes and automates the DDQ and RFP response process, using natural language processing (NLP) technology, a centralised response library and Microsoft plug-ins to speed up the process and pre-populate with previous answers.

We work with placement agents, asset managers, asset owners and consultants to remove the unnecessary workload surrounding DDQs.

Get in touch if you are a placement agent looking to speed up the DDQ response process.

 

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