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Build vs. Buy: Choosing the Right Tech Investment for PE Firms -
June 4, 2025
When it comes to technology, private equity (PE) firms often face a critical decision: Build or Buy? The right choice can significantly impact efficiency, scalability, and long-term success. Let’s break it down!
Build Your Own:
Building your own technology solutions offers full customization. You can tailor software to fit your firm’s unique needs, giving you complete control over updates, integrations, and security. This can be a game-changer when proprietary features are a competitive advantage.
However, the cost and time investment can be significant. Development from scratch demands skilled resources, ongoing maintenance, and consistent updates. Plus, there’s always the risk of unexpected technical challenges down the road.
Example: One PE firm developed a custom portfolio tracking tool, gaining a competitive edge through advanced analytics. However, they faced delays due to unforeseen integration issues.
Buy Off-the-Shelf:
Opting for an off-the-shelf solution means faster implementation and access to vendor support. These solutions are typically well-tested, reliable, and include regular updates, which can be crucial when speed is a priority.
Yet, the downside lies in limited customization. You may need to adapt your workflow to fit the software’s capabilities. Plus, subscription costs can add up over time, and integration with legacy systems can be tricky.
Example: A mid-market PE firm adopted a cloud-based CRM, gaining quick access to essential features. However, they struggled with customization, which limited their ability to integrate portfolio data seamlessly.