Technology Arbitrage in Private Equity

In Bain’s Global Private Equity Report 2025 they highlighted, “deal making has turned the corner”. This may have been true for 2024 or even when their report was published on March 3, 2025, but we are no longer operating in “normal” times of stability and predictability or even rationale times for that matter.

Although uncertainty and instability in the markets and economy can cause slower deal flow and make investors take a pause, there are opportunities to gain efficiencies and improve your intelligence gathering through technology arbitrage. This is why firms are looking at technology arbitrage to improve operations and better protect their portfolio for the storms ahead.

The private equity industry and its portfolio companies are facing some significant challenges in this new emerging economy. Some of these include:

• Inefficiencies across the portfolio

• Speed of gathering data and business intelligence

• Rising risk of cyber security threats

• Higher technology costs

• Retention of talent

Technology arbitrage is more than outsourcing to a Managed Services Provider (“MSP”). It combines the services of an MSP with the strategic and leading business intelligence of a professional services firm. While also being located domestically in a stable work environment with advanced security protocols. Traditional MSPs are used for day-to-day IT support and typically outsourced internationally to call centers. This lowers the cost of support but often lacks the quality of service, leads to higher response times, inefficiencies, exposes the organization to greater global security risks and lacks the professional business intelligence to advise the firm and portfolio companies.

Traditional outsourcing to an MSP can potentially yield a 12-16% operational cost savings.  However, creating a Private Equity technology arbitrage model can yield a 20-34% cost benefit to the overall network.

Using a technology arbitrage model across the portfolio provides the following benefits:

• Overall lower cost model (20-34%) and near zero for PE firm operations

• Rapid deployment of resources to support operations, due diligence and portfolio projects and post-acquisition integrations

• Consistent data security and cyber protection across the portfolio

• Stronger business continuity plans

• Increased speed and access to data and intel

• Continuity and stability of supporting labor

Often firms rely upon a pool of independent professionals including law firms, consulting, recruiting, operational specialists, etc. and leave technology decisions up to the portfolio companies. However, a full technology arbitrage approach can be better achieved across the portfolio with greater results by combining the services of an MSP with that of technology professionals to implement and deploy better solutions. Learn how Skolnik, a PE portfolio company and industrial packaging manufacturer, has leverage technology arbitrage in this video link. This model creates a more effective and efficient organization to be stronger through more challenging times.

To learn more about Sagin’s Private Equity technology arbitrage model, visit us at www.saginllc.com or email info@saginllc.com.