For an industry that can’t even agree on common valuation guidelines, it comes as no surprise that software solutions exist in the same sort of patchwork orange, varying considerably from one private equity firm to the next. It might be said of private equity or private real estate that everyone does the exact same thing but differently. The axiom also applies to the operations side of a firm itself, particularly when referring to the shop’s critical fund administration technology systems. The next generation of software systems promises every last bell and whistle, from web reporting to database integration across the front, middle, and back-ends to instantaneous portfolio company or property financial updates uploaded directly by the businesses themselves. Fortunately, some providers are delivering comprehensive solutions instead of stopgap products.
As the technology behind these systems becomes more sophisticated, companies are trying to hone their expertise and provide private equity firms with customized packages that fit the immediate needs of systems already in place. This can mean a software plug-in for just the deal management side or better e-mail contact management features on the investor relations side. The piecemeal approach might be a logical step for larger and more established private equity firms but would require a massive overhaul that could potentially disrupt operations. However, for many small and mid-size players, the opportunity to partner with a provider who integrates and solves several problems, there is a greenfield in front of them.
Most CFO, COO, CTOS don’t see a solution out there at the moment that answers all the questions and solves all the problems they might experience right then and there. It’s a challenge as firms have a greater need to extract data from their systems to analyze their portfolio performance and to meet LP information requests. For many even with the infrastructure in place, firms still perform certain analyses outside of their core investment accounting and management system using Excel spreadsheets and other tools because they have yet to find a software package that allows for that same amount of visibility into the back end of the data.
Anyone familiar with running a private equity or private real estate firm knows that technology systems need to cover certain crucial points in the private equity business process. With all the attention being lavished on discontented limited partners these days, making vertical integration of technology and outsourced services is a priority. As even general partners are becoming more demanding of the depth of information they can crank out of their database systems, they are no longer content with hard numbers: GPs want customized charts, graphs, and tables at the click of a button. They want systems that manage qualitative information as seamlessly as hard number data.
Some forward-thinking providers are making sense of it all and delivering scalable and comprehensive solutions. NES Financial’s private equity fund administration solution makes headway into the market with more specialized and intuitive products like user-friendly data visualizations for investor relations and portfolio management.
NES Financial welcomes your questions and opinions. Allow us to address your business needs by contacting us. We look forward to hearing from you!