|By Business Wire||
|January 27, 2014 12:44 PM EST||
In a new research study published today, “Private Equity Reporting: Transforming Data into Intelligence,” TABB Group says private equity (PE) firms recognize the value of increased transparency and more effective data management but in a world that demands to be kept informed, PE firms need an on-demand ability to transform data into useful, digestible, reportable information – intelligence that can be utilized to meet stakeholder demands and at the same time improve the quality of their decision-making.
The challenges for many of these firms, says Adam Sussman, a TABB partner and director of research who produced the study in collaboration with SunGard, are operational deficiencies preventing them from delivering the intelligence they need to support stakeholder reporting and their investment decisions. “Although the quantitative and qualitative research that TABB has conducted indicates general partners (GPs) have invested in technology, document management and data dissemination remain a challenge for over 60% of them.”
To assess the current approach PE firms use to manage data, TABB surveyed 119 senior PE executives across the U.S., Europe and Asia. Nearly 33% have Assets under Management (AuM) of more than $5 trillion, deploying a range of strategies, including buy-outs (24%), venture capital (20%) and funds of funds (17%).
With many PE firms currently underperforming, facing a shift in power from GPs to limited partners (LPs) – some large PE firms service hundreds of LPs – and a competitive fundraising landscape, Sussman says their interest in data transparency and accuracy demonstrate the importance of data management in four key areas:
- Investment Decisions: more than one in four firms believe that achieving their data management objectives will result in at least considerable improvement to the quality of their investment decision-making
- Investor Reporting: only 23% currently provide access to interactive investor reporting, although 70% flag its importance to do so; 33% claim that producing on-demand performance reports is challenging
- Operational Efficiency: 67% see operational efficiency as the most important goal of their investment-management platform
- Regulatory Compliance: regulatory reporting poses a significant challenge for 39% of the firms; only 25% believe they have the necessary system integration
As improvements are made and benefits accrue to the LPs, Sussman believes the PE industry will prosper. “When LPs can more easily compare the performance and performance attribution of various GPs, the competition for assets can become more targeted at specific areas of value and differentiation. Allocations to private equity could see even further increases as some of the limitations of the asset class are resolved. A virtuous cycle of efficiency and transparency yields greater investor confidence, lower cost-to-income ratios and a stronger competitive environment. These will be the just rewards for PE firms that not only make the right investment decisions, but also the right investments in their own business.”
The 15-page study with 15 exhibits is available for download through a SunGard registration page, http://bit.ly/1c8fiKr. It can also be downloaded by TABB Group Research Alliance Equities and Data and Analytics clients and pre-qualified media at http://www.tabbgroup.com/Login.aspx. For a copy of the Executive Summary or to purchase the research, write to firstname.lastname@example.org.
About TABB Group
Based in New York and London, TABB is the only research and consulting firm focused exclusively on capital markets, based on the interview-based, “first-person knowledge” research methodology developed by Larry Tabb. For more information, visit www.tabbgroup.com. In 2010, TABB launched TabbFORUM, the online capital markets community for peer-to-peer contributed opinion and analysis covering current industry issues, tracked daily by 18,000-plus professionals; in October, 2013, QuantFORUM, a new online channel for the global quantitative investing community, went live.
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