the full picture: automating UBO discovery for private equity firms

by | Nov 2, 2018 | All Blog Posts, Featured

In part one of this blog, we looked at the increasing regulatory risks facing Private Equity firms driving a reevaluation of the due diligence process.

The need for fast, accurate and comprehensive pre-acquisition due diligence on companies and beneficial owners can only be addressed by technology, and in the second part of this blog we focus on Intelligent Process Automation.

Identifying and verifying ultimate beneficial owners (UBOs) requires access to multiple sources of data, potentially across multiple jurisdictions. Accessing these sources to retrieve relevant information and documents, piecing this disparate data together and manually mapping out a company’s structure using the findings is a long and laborious process. With competition high, slow processes can have an impact on a firm’s success. A technology-led approach to UBO discovery allows firms to move quickly and confidently, offering significant competitive advantage.

why automate?

A 2017 McKinsey Global Institute report, A Future That Works: Automation, Employment, and Productivity, makes a strong case for continued innovation stating that

Automation of activities can enable businesses to improve performance, by reducing errors and improving quality and speed, and in some cases achieving outcomes that go beyond human capabilities. Automation also contributes to productivity, as it has done historically… Based on our scenario modeling, we estimate automation could raise productivity growth globally by 0.8 to 1.4 percent annually.

The UBO discovery process is ripe for automation as the sources of information that need to be accessed are available digitally and published via Application Programming Interfaces (APIs). This means that relevant data can be pulled into due diligence tools and platforms saving many hours and streamlining decision making.

Intelligent Process Automation is particularly well suited to the UBO challenge because it augments more traditional rules-based automation with certain decision-making capabilities.

increase quality of UBO discovery

The manual processes used to access and analyse data from disparate sources means that critical information can slip through the gaps. And these gaps in due diligence – a piece of adverse media linking a beneficial owner to fraud, for example – expose a firm to significant risks. When technology, not people, is used to gather this information the output is faster and more accurate. This is simply due to the capacity offered by machines when performing these routine tasks.

improve cost efficiency

In depth due diligence is expensive, and for PE firms involves a great deal of wastage. Issues that are uncovered during this activity can break a deal, but by this time the money has already been spent. Automating preliminary due diligence allows firms to identify deal-breaker red flags fast and ensure time and money is not wasted on costly due diligence reports. Based on average industry statistics due diligence costs could be reduced by up to 50%.

make fast, confident decisions

Unicorns are few and far between, and competition for the most exciting deals is high. Slow due diligence processes can mean missing out to rivals who are able to move more quickly. Compliance needs to support a firm’s growth objectives not hinder them, but traditional due diligence methods are becoming an increasing issue. Improving speed is a must, but not at the risk of reducing quality.

Automating manual processes for UBO discovery, as well as other steps in the compliance and due diligence processes, provides firms with the information they need to make informed decisions fast. encompass uses intelligent process automation to simultaneously access multiple data sources and use the information retrieved to dynamically build out corporate structures. Based on the results, and the UBOs identified, additional screening can also be automated to uncover issues at deeper levels including political exposure, financial misconduct and controlling shares in other companies with vested interests.

At encompass, our goal is to make due diligence more efficient by speeding up the information gathering process and presenting data in a way that’s easy for analysts and compliance officers to understand and manage.

If you’d like to learn more, or have specific due diligence challenges that you’d like to discuss, please get in touch.

about encompass

Founded in 2012 by entrepreneurs Roger Carson and Wayne Johnson, and operating from the UK, encompass is the creator of unique, innovative Know Your Customer (KYC) software for banking, finance, legal and accountancy that enable better, faster commercial decisions. The company is driven by the belief that the best decisions are made when people understand the full picture.

want to turn regulatory compliance
in to a competitive advantage?

Contact us today to arrange your personalised consultation of encompass. Discover how our KYC automation software can help your business accelerate onboarding and give you peace of mind that you are regulator ready.

By continuing to use the site, you agree to the use of cookies. more information

our website and use of cookies

Your personal information will not be collected if you are only browsing one of our websites but we do use cookies to better tailor our information and our services to meet your needs.

A cookie is a small piece of text that is placed within the memory of a computer and can be later retrieved by web page servers. Cookies are used to enhance your interaction and convenience in using our website and we do not use cookies to record any of your personal information. Cookies may record information about your visit, including the type of browser and operating system you use, the previous site you visited, your server's IP address, the pages you access and the information downloaded by you.

While this anonymous statistical data may be aggregated and used in broader statistical analysis by us and our web monitoring service provider to improve our services, we cannot personally identify you as the source of that data until such point as you provide your personal information to us.

close