Disruption case study: Apperio

In a market such as private equity, introducing new technologies and ways of working have so far met a frosty reception, despite the enticing opportunities on offer. Much of this is because private equity continues to be a relationship-driven market – and rightly so. In contrast to the B2C financial services market, average private equity transaction sizes, whether it be commitments to funds or investments in portfolio companies, are often in the tens of millions, requiring personal relationships and deep levels of trust.

One relatively new business, however, appears to be breaking into the private equity market. Apperio is a software platform that enables users to track legal fees in real time.

Founder Nicholas d'Adhemar (pictured) had previously worked for a private equity fund and was all too aware of the headaches caused by larger-than-expected legal bills. His original aim for the startup was essentially a marketplace for legal services, where private equity firms could tender for particular projects. "Private equity is very relationship driven, so while funds were using the services to get estimates for work, more often they would go with the lawyer or firm they had an existing relationship with," says d'Adhemar.

Sweet spot
Fortunately, alongside the tender offering, the startup had also created a side product – a price monitoring function. By refocusing the offering to real-time fee monitoring, Apperio piqued the interest of private equity and law firms alike. "When we first set up, the initial reaction was that lawyers wouldn't like it but that would only be the case if they're not being efficient. Actually, lawyers don't like talking about money," explains d'Adhemar. "But this product helps build trust. For lawyers, it should mean they are more accurate in recording time spent and for private equity they're more likely to pay the full bill, rather than demanding reductions when the final bill hits."

Another of d'Adhemar's key observations when working for a fund was that people rarely have a clear idea of how much services will cost. "Data helps in predicting overall fees, so that a lawyer and fund can take a view on a reasonable outcome," he says.

Data helps in predicting overall fees, so that a lawyer and fund can take a view on a reasonable outcome" – Nicholas d'Adhemar, Apperio

Furthermore, d'Adhemar believes private equity firms are often sitting on a lot of data that is not being used to its full potential. "Typically, they track information on each deal done. Apperio can help funds look into that historical data and find similarities between deals to create profiles for new deals." And here is where Apperio's offering has the potential to become a genuine, industry-wide technological advancement: by enabling meaningful transparency between fund and service provider, the eventual bill payer (whether it be LP or portfolio company) has absolute certainty over costs and fees charged by the fund.

The company recently received £1.7m in seed funding from Notion Capital alongside NextLaw Labs and IQ Capital, as well as high-profile industry individuals.

As pressure on private equity fees intensifies, accurate breakdowns of costs, delivered in real time, can only strengthen trust between parties. While face-to-face relationship building will always be at the heart of private equity, using data and technology is surely a positive development when it comes to maintaining these relationships and increasing transparency.

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