The entrepreneur creating a Match.com-style solution to selling businesses

FINDING the relevant links between half a trillion data points from thousands of horse races doesn’t sound like many people’s idea of a “fun project”.

But that’s the description dealconnections’ founder James Waterhouse gives for his side project, called Equotion.

It has pulled together the result of every horse race for the past seven years, examined a range of factors and built a set of algorithms which work out which horses have the best chance of winning the race.

“It is designed to use historical performance of horses and jockeys on particular courses,” he said. “In our tests we are about four times better than betting on the favourite at the moment.”

This equine sideshow leads us on to Mr Waterhouse’s hobbyhorse: the commercialisation of big data.

“If we look beyond dealconnections, that’s where I see the market,” he said. “Taking huge volumes of data, combining it with other data sets and getting the insight from it.

“The guys that we work with, their background is crunching phenomenal amounts of data and looking for links and then working out why they exist. That’s the clever bit of data analytics.”

Big data, he explained, can be understood as a four-stage process. Finding links between data, identifying causality between those links, forming a prediction, then automating that working hypothesis.

But for now Mr Waterhouse, who is a technology partner to private equity firms, is putting his energy, and cash, into utilising scale in a different way.

His dealconnections website seeks to do for the M&A market what online dating has done for lonely hearts’ ads – putting those searching for someone who is right for them in front of a much larger, and more efficient, market of would-be suitors.

“The M&A market still works on who you know and most of the corporate advisers work like an old-fashioned dating agency,” he said, describing the scenario of an interview followed by an adviser pulling out a couple of possible matches from their relatively limited pool of contacts.

“What we have done with dealconnections is we have acquired the rights to the data for the UK’s only 100% deal aggregator and we have put a Match.com-style solution behind it.

“Now anybody can search all of the businesses. It’s a massive consolidation.”

The site lists 60-70 new opportunities per week, thanks to its ability to source and collate “around 100% of the publically-marketed mandates” along with “an awful lot” of the sensitive mandates.

The creation of an online marketplace can also make it more controlled and manageable for advisers and investors to keep an overview of the available opportunities.

He added: “If you are a deal originator in a private equity firm or similar, you probably receive a couple of hundred emails a week.

“What the site does is it takes everything that everyone is emailing you, you then set your own constraints around it and so it helps you look for deals. The deals you might be interested in, not the deals that someone else thinks you might be interested in.”

This curation and aggregation strategy is made simpler because it does not require the seller to do anything additional to what they have previously done.

“Nothing has changed for the seller,” said Mr Waterhouse. “They don’t have to register with us, the deal just lands on our site.

“From a buy side, all you are actually doing is opening up the network. An adviser has their network, but by using our solution you can get access to a complete view of the market.”

“That complete view is interesting. It’s great for selling your company, for seeing what else is out there in your sector, and it’s interesting to see deal volumes.”

This aggregation of information is already providing fascinating insights. For example, last month was the first time businesses with combined annual sales of £1bn came to the market, which compared with an average of £500m a month in 2014.

This shift, according to Mr Waterhouse’s analysis of the data, was driven by European household and personal care businesses. His excitement comes from the fact that this indicator of economic activity, which can be split by region and sector, provides information that will be six months ahead of information on closed deals.

The success of a marketplace, physical or virtual, is primarily dependent on getting enough sellers and buyers together in the same place to create critical mass. The first part of that challenge has been achieved, with the focus on the business now on getting itself known much more widely.

The target is for the website, which was overhauled after its initial launch a year ago, to grow the number of users on the site to upwards of 2,500 by the end of the year.

Mr Waterhouse said: “Our biggest obstacle is getting the product in front of enough people and that’s about marketing cash more than anything else. We know we need to have a significant push on advisors.

“You have to tell everyone that it’s relevant to. Our private equity database has something like 6,500 individuals. We have built a massive database which is important in itself, that’s a great resource to have.”

Mr Waterhouse has two ambitious aims for the site.

He said: “I want to combine two things. I want to be the Rightmove for the business for sale market and I also want to be the myhomemove of the private equity market – they provide conveyancing services in an automated way.

“I’d like to do that for the deals market. I think that’s a really strong proposition.”