Introduction to PE Part 4: The Business of Data in Private Markets
I already talked about why private companies are so secretive. But there’s a whole industry built on trying to find their secrets anyway.
Companies like PitchBook and Preqin spend all their time collecting data on private deals. They look at who’s buying what, how much they’re paying, and how well those investments are doing. But it’s not perfect. The information is still hard to get, expensive, and not always consistent.
This is a huge deal. Think about it. Non-listed companies make up 99% of all the companies in any economy. But we know so little about them compared to the 1% that are on the stock market.
The data providers have to use all kinds of methods to get their info. They look at public filings (where they exist), they talk to people in the industry, and they even look at FOIA (Freedom of Information Act) requests in some cases.
Even with all that, we’re never going to have “perfect information” in the private world. It’s just not how it works. You have to be okay with a little bit of mystery if you’re going to play in this market.
In the next post, we’ll talk about the benign neglect of private markets and what it means for the economy.