Third Bridge co-founder and chief marketing officer Joshua Maxey discusses PE firms’ increasing appetite for early-stage due diligence.

If your early-stage research process is still an improvised collection of sell-side reports, consulting decks, and rushed conversations with executives, there is a good chance you are missing out. Over the last few years, the primary research sector has seen strong growth against a backdrop of declines in the traditional research market.

Third Bridge, a global investment research company, has been a major beneficiary of increased interest in early-stage due diligence. What led to the shift in investor behaviour and how does your Forum product assist with this?  

There was so much hype around alternative research and big data; I think some analysts temporarily lost sight of how valuable human insights are to investors. If you're researching a private company in a competitive process, there isn’t that much out there beyond financial data and generic research. If you want an edge, one of the most valuable things you can do is listen to industry executives with the relevant experience and insight.

Fifteen years ago, that meant expert calls, and although Third Bridge has one of the world's biggest expert networks, we’ve seen incredible momentum with Forum and the impact it’s having on the early-stage research process for PE investors.

Third Bridge attracted investment from Astorg last year thanks to the soaring popularity of its Forum product. Today, the top ten PE firms use Third Bridge research for early-stage due diligence, how does Forum make the life of a PE investor easier?   

The feedback on our Forum content has been incredible. Today, our Forum product is by far the largest collection of primary interview content - collected from over 30,000 interviews with industry executives. This translates to 450,000 pages of content to help PE investors quickly assess the market opportunity of any business or unearth operational red flags on a deal early on. The relevance to our clients’ deal flow is very high.

The second point is quality.  Everyone wants to avoid getting dragged into an auction process or lapsing into groupthink, but to do so, PE firms need high quality, original and timely insights.  Our Forum product allows PE investors to understand the moat of a business, test their thesis, and ultimately build the equity story.

Now that the primary research market has gone mainstream, what's next for investor research?

We have created a new category of research with our Forum product and we are seeing rising demand across all major asset classes and regional investment hubs.

Looking ahead, the research industry for PE investors needs to evolve further and, to some extent, catch up with what we have seen in the public markets. The velocity of deal flow means there is a need to accelerate early-stage research and due diligence.  

To support this need, we released a new enhancement earlier this year called Key Insights, situated on the front page of each transcript. We have had overwhelmingly positive feedback from our clients on this, as it's all about helping them get to the insights that matter - faster. 

To access free content and find out more visit: www.thirdbridge.com/realdeals