Ontra analyzed proprietary data related to the number of non-disclosure agreements that private equity, venture capital, and credit investors negotiated during the fourth quarter of 2022. We combined these findings with responses to a survey conducted in late 2022 from 400 professionals across the private equity, private credit, real estate asset management, and infrastructure investment spaces to identify notable trends from the past year and expectations for 2023.
What we found
Private markets firms plan to invest more in technology in the coming year, and that stands to reason – many are still dealing with legal process pain points that are costing their teams a significant amount of time away from high-value work.
Firms should be aware of how slow or inefficient internal processes can weigh down performance and returns. In a healthy fundraising and dealmaking environment, strong growth and returns can hide inefficient processes, but the margin for wasted time and resources narrows significantly as economic headwinds grow.
Implementing the right technologies, such as the legal operating system from Ontra, can help investment firms look toward the future with confidence.
Our research revealed several key findings:
When asked, asset managers said they saw fewer economic headwinds in 2023.
53% of survey respondents said they expect to face fewer economic challenges this year than they did last year.
That came despite significant macroeconomic challenges in 2022.
Survey-takers cited rising interest rates as the largest influence on their investment strategies last year, with inflation coming in a close second.
A decline in Q3 and Q4 ‘22 NDA volume foreshadows decreased M&A activity during the first half of 2023.
Ontra’s NDA Volume Index shows NDA volumes declined sharply in the last half of 2022, which signals a likely continued slowdown in the number of deals being done in the first half of 2023.
Employees spend a significant amount of their workweek negotiating NDAs, to the detriment of other work.
In our survey, 65% of respondents – who included investment professionals, in-house lawyers, compliance professionals, investor relations professionals, and finance professionals – said they personally spend more than six hours per week negotiating NDAs, and 61% said NDA negotiations were detracting from other strategic work their firm needs to do.
Obligation compliance is a pain point for firms.
Seventy-seven percent of our survey respondents said they worried at least once in the past year about not complying with investor obligations. This fear is driven, in part, by the fact that obligations are typically tracked in spreadsheets or in lengthy written compendia where important details can be overlooked.
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