The $2.8M data room mistake (and a game where you can make it yourself)
Hey there!
The weather really can't make up its mind this week. We had a day of snow in the morning last week, with the air conditioning on in the car in the afternoon, and the kids were evacuated from school early yesterday due to a tornado warning. It's never boring, at least!
I've had some great meetings this week with prospective partners, building an exciting agenda for my first visit to ACG Dealmax this April. Please drop me a note if you're also heading there, and we haven't already got plans to meet up.
Enjoy the rest of this week's memo!
Graeme
Three Things I Learned This Week
EY UK report on data readiness
This is a Big Four firm publishing exactly what operating partners need to hear: data readiness is not a tech project, it is a valuation lever. The numbers are concrete. A 20% churn reduction. A 15% EBITDA lift. A 10x exit. When EY tells the market that unresolved data problems erode sale value, delay timing, and reduce deal certainty, it validates the conversation you should already be having with every portfolio company in year two of the hold. If you are not starting data readiness 24 months out, you are leaving money on the table and creating friction your buyer will price against you.
The $2.8M cost of three mismatched numbers in one data room
Greg Hood, CPA and former fintech finance executive, joined me on the PE Data Guy podcast to explain how three mismatched revenue numbers in a single data room cost one company $2.8M and why finance and data infrastructure always get fixed last – right up until the exit falls apart.
Company all-hands meetings matter more than you think
I brought the Crawford McMillan team together this week for a big-picture session on pipeline, positioning, and the company's direction. Most of the team works on individual strands of the business and rarely sees the full picture.
Giving everyone context on what the others are doing, where the opportunities are, and how their work connects turned out to be one of the highest-value hours of the month. That is not just my opinion. The team said afterwards that it was something they needed.
If you are running a small firm or a portfolio company with a lean team, do not assume people have context just because the company is small. They do not. Bring them together regularly. The alignment is already compounding for me.
Two News Stories From This Week in Mid-Market PE & Data
Story 1: Anthropic in talks with Blackstone and Hellman & Friedman for AI joint venture targeting PE portfolio companies
Source: Axios
Anthropic, the company behind Claude, is in active discussions with Blackstone and Hellman & Friedman to create a joint venture that would sell and integrate AI into their portfolio companies. The model being discussed follows Palantir's playbook: a consulting and integration layer that deploys AI tools directly into portfolio company operations. The Information broke the story March 11. Talks briefly paused over Anthropic's dispute with the Pentagon (the company was labeled a "supply chain risk" over its AI safety guardrails), but discussions have resumed. OpenAI is pursuing similar PE partnerships, signaling this is an industry-wide move, not a one-off.
Read this story carefully and notice what is missing. Two of the largest PE firms on the planet cannot simply hand their portfolio companies an AI subscription and tell them to figure it out. They need a joint venture with a dedicated integration and consulting layer to make it work. That is an admission that the data infrastructure inside most portfolio companies is not ready for AI. If Blackstone – with $1 trillion in AUM and every resource imaginable – needs a Palantir-style deployment model to get AI working in its own portfolio, what does that tell you about the readiness of a $200M revenue mid-market company running three ERPs from two acquisitions ago? The AI is available. The data underneath it is not.
Story 2: Kohlberg-backed Riveron acquires Cuesta Partners to build AI and data advisory for mid-market PE
Source: Riveron announcement
Riveron, a 1,200-person advisory firm backed by Kohlberg ($17 billion AUM), announced a strategic investment in Cuesta Partners, a Chicago-based AI and data consulting firm with 130 employees. The deal is designed to give Riveron an AI-native capability layer for its mid-market PE clients. Cuesta brings data strategy, advanced analytics, AI execution, and technology due diligence. Riveron brings scale, CFO relationships, and a deep bench across M&A, financial distress, and technology transformation. Kohlberg partner Ahmed Wahla said the deal puts "data-centered insights at the foundation" of the combined firm's services.
This is a signal, not just a deal. When a PE sponsor backs its own advisory firm to acquire AI and data capability specifically for mid-market portfolio companies, it validates that the market for this work is real and growing. Kohlberg is not doing this because data readiness is a nice-to-have. They are doing it because their own portfolio companies need it, and they would rather own the capability than keep hiring for it. If you are an operating partner watching this, the question is not whether data readiness belongs in your value creation plan. The question is whether you are going to build it, buy it, or keep ignoring it while your peers move.
Free Tool of the Week - Data Room Survivor
We built a free game on the Crawford McMillan site called Data Room Survivor. You play the CTO of an $85M PE-backed company. A buyer just entered diligence. Over 10 days, their team probes every data asset you have, and your choices affect buyer confidence, timeline risk, and valuation in real time.
Every scenario came from actual mid-market diligence engagements. It takes five minutes, it is surprisingly stressful, and most people do not survive with their valuation intact. Give it a go and let me know your score.
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As always, please forward this on to your favorite PE-backed friend.
Cheers,
Graeme