Over the past couple of months, Acclaro has fielded several inquiries from private equity groups curious about what can be learned about competitors’ operations.
Competing in niche industries with few or no public companies as proxies and limited published market data, portfolio companies must operate somewhat blindly in their industry segments. However, some private equity groups have encouraged their portfolio companies to utilize competitve intelligence practitioners. They do so to augment their internal understanding of the competitive landscape, competitor capabilities, and most importantly, competitor intentions.
Most private equity portfolio companies have a narrow and shallow understanding of their competitors. Those subject areas they do understand about competitors (e.g., revenue, product line, and core strengths and weaknesses) do not extend deeply into a range of finance, product or corporate strategy issues.
A one-time review of the competitive landscape is not enough. The functional understanding described in this white paper can certainly not be achieved in one study. The portfolio company needs to build up a baseline understanding, with help from a third-party consulting firm with expertise in competitive intelligence. This baseline understanding should be updated annually, probing both more deeply into known areas, and broadly into areas that are not yet understood. Over time, a portfolio company will be able to anticipate competitor’s moves and make bold decisions understanding in advance how the competitors will or will not respond.
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