Private Equity

Deal Management Software for Private Equity Firms

Last Updated:
February 7, 2023

Software should help your private equity firm streamline processes and simplify or automate essential tasks throughout the deal lifecycle.

Due to their nature, private equity and venture capital firms face unique challenges that can be mitigated using the proper purpose-built deal management software.

The systems, processes, and tools you have in place can be a source of competitive advantage that can mark the difference between closing a lucrative deal and not. With the right software, you can better organize your firm’s workflow, streamline operations, and close more business.

Although investing in generic cloud-based CRM software built for transactional sales teams might seem appealing, these solutions (Salesforce, Hubspot, etc.)  follow a workflow focused on converting sales opportunities into customers, ignoring the unique intricacies and relationship component of investing in private markets and other alternative investments or asset classes.

Here is our take on deal management software's value to private equity professionals.

Key Needs of Private Equity Firms

Harnessing the power of technology can help your firm manage its most pressing needs, including organizing deal pipelines, supporting relationships, storing deal information, automating workflows, and keeping track of metrics in real time.

Let’s dive in to see how a firm can benefit from implementing deal management software through the various deal stages of the private equity pipeline.

Deal Sourcing

Sourcing deals is one of private equity firms' most important and time-consuming functions. Sourcing the right investment opportunities at the right time is crucial to maintaining a healthy deal flow.

There are two main ways of sourcing deals: inbound and outbound.

Inbound deals are those that come to you or your firm from other sources. These might be via your network or by regular referrers who know the type of company that may be a good match for your firm. In the private markets, your network is the prime source of quality deal flow; thus, you must maximize your network to its fullest potential. Keeping all your contacts in your email and Excel spreadsheets hurts your ability to source deals.

On the other hand, outbound sourcing describes the activities you undertake to identify and pursue possible companies to acquire. For example, by proactively reaching out to specific companies you might be interested in starting conversations with. At some point, you will need to leverage your network to develop an introduction path to the CEO or other executives from the target company. Regardless, having a solid network is essential to conducting business development to source the best deals.

Both inbound and outbound sourcing have something in common – the volumes of data you need to manage to stay on top of the relationships. In other words, you need to be able to engage with the right people at the right time.

For your deal team to efficiently track the progress of each deal through the different stages, from a new lead to a closed deal, the private equity software platform that you choose should have robust forecasting and reporting functionality—tracking every touchpoint you have with a prospect, including emails, meetings, and phone calls.  For firms with a more robust marketing approach, you might also extend that to event and webinar attendance or other signals that might help track engagement to close deals.

Due Diligence

After origination, a potential deal must undergo due diligence, which is critical to identify, assess, and minimize risks before moving forward with a potential acquisition. Whether acquiring a small business or an enterprise, your firm must thoroughly evaluate the company.

A thorough due diligence process will involve evaluating a company's legal, operational, IT, and financial areas to validate the assumptions supporting your firm’s investment thesis. Naturally, one of the challenges during this process is unearthing all the information you need to make an informed data-driven decision. At this stage, you will most likely require the services of third-party professionals (accountants, lawyers, consultants) to perform specific analyses.

The right software platform can simplify due diligence workflow management by helping you find the best professional service providers in your network, organize and manage documents, and streamline the process. Additionally, software with artificial intelligence (AI) can help save valuable time by automating time-consuming tasks such as data entry.

Deal Pipeline Management

When juggling various current and potential future investment deals, you need to have an effective and easy-to-use deal management system coupled with the right people and processes to ensure nothing falls through the cracks. There are no excuses for you not to be able to track deals effectively.

You don’t want to miss due dates or crucial touchpoints with a prospective company. The effectiveness of your deal management process and your team's deal management platform can often be the difference between securing a deal and being caught in a competitive battle.

Portfolio Support

The era when private equity was only associated with financial engineering is long gone. Today, PE firms are much more involved in operational value creation. Once the acquisition occurs, it is in your firm’s best interest if the acquired company succeeds.

In essence, the goal of portfolio management and support is to create value by improving the company’s performance, according to your firm’s investment thesis.

There are various moving parts involved with portfolio support and management. These may include making key client introductions, recruiting C-level leadership, helping executives restructure internal and financial operations, and tracking the company's progress. All these projects need to be streamlined, documented and managed efficiently.

To efficiently support portfolio companies, you need to leverage the power of your firm’s networks. By making the right introductions to the right professionals at the right time, you can add immense value to your portfolio companies. An AI-driven deal management software solution can help you find the best contacts within your team’s networks to make those coveted introductions.


To acquire companies, your firm needs access to capital from limited partners. Fundraising is the lifeblood of a private equity firm; unfortunately, raising a fund involves multiple parties and moving parts, requiring efficient oversight to ensure information doesn’t fall through the cracks.

Deal management software can keep this information well organized and identify possible sources of capital. Like deal sourcing, the software can help your investor relations team track the fundraising process, follow up with investors, identify potential limited partners, or facilitate introductions. Compared to the previous ways, which consisted of scouring contacts, conducting internet research, and using information repositories, the right software can search for you and create a shortlist of potential limited partners within your ecosystem while eliminating time-consuming manual tasks.


Reporting on metrics is a common task for dealmakers. For example, generating quarterly progress reports for your fund’s limited partners. Among other reporting needs, you must also prepare multiple internal reports to monitor progress and forecast your deal pipeline.

Producing accurate reports can be arduous due to the amount of information you need to gather from various sources. The right deal management software solution is a single source of truth that can automatically compile multiple data points and create easy-to-read dashboards, thereby eliminating the need for manual entry and manually generating reports, reducing errors, and improving accuracy.

What to Look for in Deal Management Software

To keep up with all the aforementioned tasks, your private equity firm needs to find the right software to streamline operations, leverage your relationship networks,  and keep your competitive edge.

Deal management software is much more than a generic CRM platform designed for tracking the sales process by moving deals down a sales pipeline.

Here are a few of our thoughts on what you should look for when evaluating a prospective solution.

  • The software that you choose should be built from the ground up to support the needs of a private equity firm. Software designed explicitly for PE has been created with this industry’s unique relationship management and project management needs.
  • The software vendor you select should provide a comprehensive onboarding process for all users and stakeholders, allowing your firm to ramp up and generate value.
  • A focus on automation. You want to do as little manual data entry as possible. If data needs to go from one place to another, you want that to happen automatically, in real-time. For example, suppose you need a specific report on the first of every month. In that case, the software can compile the relevant data and automatically create the report.
  • AI can further streamline your team’s processes. A deal management system like 4Degrees uses proprietary algorithms to provide insights about your network, such as job changes, investments, noteworthy social media updates, and other relevant news. These insights can be strong signals of when you or a team member should reach out.
  • The software you choose should be reliable and intuitive. You should not spend your valuable time figuring out how to use a tool. Additionally, the platform must seamlessly integrate with other tools you already use, such as your iOS or Android device via mobile app, Gmail, Outlook inbox, and calendar.  
  • Your deal management software provider should easily integrate with other tools in your software stack, including fund management systems and virtual data rooms.

The truth is private equity firms that don’t invest in technology solutions to streamline business challenges and automate functions will be at a competitive disadvantage.  Software isn’t just for startups and technology companies – in today’s technology-enabled world, almost every firm needs more advanced tools to succeed. If you are ready to take the leap and invest in your firm’s success, feel free to request a demo of 4Degrees here.

Meet The CRM Built For Deal Teams.

4Degrees is tailored for the sourcing, relationship, and pipeline activities that drive your business.
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Meet The CRM Built For Deal Teams.

4Degrees is tailored for the sourcing, relationship, and pipeline activities that drive your business.
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