Strategy Execution Blog

The new role of data in Private Equity

The new role of data in Private Equity

Data has always been at the heart of monitoring a private equity managers portfolio. Even the most basic valuation model relies on consistent and accurate reporting from a fund’s assets. Operating partners, CFOs, and portfolio managers historically have leaned on spreadsheets and traditional KPIs to evaluate the performance of each of their investments. But what happens when a global pandemic shakes up the industry across the globe?

Using data to make more informed decisions

Fund managers are now trying to answer new questions like, how can we survive, and what sectors are now presenting an opportunity for new investment? Certain assets may need propping up while others might have capitalised and gained market share over the last 6 months. The GPs that are capturing deeper market data in systematic ways and those who use tools beyond Excel have these answers. Operating teams are in place and there is a heightened emphasis on information flow. The data is informing decisions that can be made with executives quickly to navigate the changing economic environment and adjust value creation planning

According to a recent webinar hosted by Private Equity Wire about how PE managers are monitoring portfolio performance and the challenges from a data aggregation perspective, it’s not just about aggregating data, its making sense of the data in a way that means PE firms can make more informed decisions. The trend is not just for portfolio analytic tools but collaboration tools that wrap around this [data aggregation] process.

Employing a consistent framework for data

For Operating Partners to first trust the data they receive from their operating companies and then for that data to be adjusted and reviewed technology is again an ally. Today’s forward-thinking managers are connecting directly to the accounting tools of their portfolio companies and utilising machine learning to flag inconsistent or outlier data. Technology also supports standardising the key data sets that feed into any valuation model or IRR calculation. As data is synergised, modern BI is used to bring to review value creation plans, ESG, and other key KPIs with the Board. The technology provides the framework for good and actionable data that can be trusted and consumed by the key stakeholders at any business.

Today’s fund managers are faced with greater competition for deals and massive market interruptions like COVID-19 and the managers who are continuing to create value through it all continue to rely on an analytical approach and a consistent framework.

Leverage data to differentiate

EY recently reported that 'not only do financial teams need to leverage technology effectively to be more efficient and add greater value to the organization, they also need to deploy next-generation technology and an approach for leveraging that data to differentiate their organization'.

How EXM can help Portfolio Managers leverage their data more effectively

EXM is the first solution dedicated to Value Creation planning and execution for Private Equity. Bringing together Value planning and Portfolio Monitoring into one single platform. From automated data extraction at asset level to sophisticated financial and operational reports for quarterly information to LPs, including IRR and Multiples calculation, EXM ensures data you can trust, knowledge you can leverage and insight to optimise your value creation.  Download our brochure to learn more about how EXM can help you leverage your data and differentiate you in your fundraising efforts.

 

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Topics: value creation, private equity, portfolio managers, data