6 benefits of portfolio monitoring software for private equity

Implementing a portfolio monitoring solution has been part of the maturity cycle for most Private Equity Managers and was a pre-requisite when it came to raising funds from Institutional investors. Over the past 20 years, portfolio monitoring has focused on the collection of portfolio company financials and performance indicators and included analytical and reporting tools.

The private equity model has been very effective and according to Preqin, the US$4.4t currently managed by private equity firms is expected to double in the next 5 years.


Portfolio monitoring is now evolving

The increased allocation to PE combined with the disruption caused by the pandemic is accelerating the need to digitise processes across not just the portfolio but also within the PE firms themselves.

There are very clear indicators that PE firms will evolve to be much more transparent when it comes to the performance of their value creation initiatives across the portfolio including initiatives to improve sustainability (ESG), with PwC suggesting that "ESG measures could be embedded into the powerful and sophisticated value creation plans that PE already has”.

In addition, new research from CoreData shows momentum towards ESG has accelerated since the pandemic and it found that 73% of UK fund buyers think all investment funds will incorporate ESG in the next five years.


“Three-quarters of UK investors expect all fund managers will soon be integrating ESG factors within their strategies”


Whilst current financial performance is a key metric, having visibility over the levers that drive future performance can increase the confidence that targets will be reached.


Learn more about how to embed ESG into your value creation planning


How to embed ESG in your value creation planning


Portfolio monitoring software for private equity

Monitoring PE funds is far more complex than it used to be and a report by EY states that “Private Equity firms must do a better job of capturing and tracking the value they are creating and the impact of their activities”.

As the space continues to evolve the demand for diverse and more sustainable strategies increases, posing challenges for private equity managers attempting to manage all the assets in their private equity portfolios consistently and accurately.

Within any firm, there can be many core platforms, which support all aspects of business operations. From a CRM platform for deal sourcing or investor relations efforts, to back office systems that support departments such as fund accounting, human resources, and compliance. One increasingly powerful tool that is being adopted more widely is the portfolio monitoring platform for tracking and managing portfolio company performance.


“Private Equity firms must do a better job of capturing and tracking the value they are creating and the impact of their activities”.


6 benefits of portfolio monitoring software for private equity


1. Increased visibility

Private equity portfolio managers need clear insight into a wide range of metrics from specific company performance to IRR and multiples calculations. This level of visibility is essential for effective long-term value creation planning and reporting.

Some of the best private equity portfolio monitoring solutions can streamline data collection by directly accessing the accounting system of your portfolio companies and flow the information through to the GP level feeding into your stakeholder and investor reports thus offering complete data transparency and accuracy.


2. Links your portfolio monitoring to value creation

According to EY “With pricing multiples at historically high levels, the PE value creation agenda has become a more important driver of EBITDA and overall deal exit returns”.

The cloud-based portfolio monitoring tools of today offer private equity firms an unprecedented opportunity to improve efficiency and profitability. Allowing all portfolio companies to be seen and orchestrated in one place and linked together, key performance metrics can be monitored across the portfolio in real time. As a result, data gathered from one company can help boost the value creation of another or inform your decisions to merge assets.

A quality monitoring system should not only work to boost productivity, minimise the potential for error, and help you manage your portfolio in a more efficient way, it should also be the bridge that links your portfolio monitoring to value creation. Thus, helping you to make better future decisions in your value creation planning.


“With pricing multiples at historically high levels, the PE value creation agenda has become a more important driver of EBITDA and overall deal exit returns”


3. Real time data reporting and data analysis

Operating a fund or portfolio in just Excel today isn’t possible and having the capabilities and skills in place to support integrations for data modelling and analysis is becoming very important.

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 more sophisticated portfolio monitoring platforms can not only access your existing data but capture deeper market data; you need data you can trust.  Accurate and timely financial data is vital to present reliable, concise quarterly reports to stakeholders and shareholders.


'You need data you can trust'


Learn more about the new role of data in private equity


Close up of human hands using virtual panel png-1


4. Customisable dashboards

Dashboards where you can view, at a glance, information - KPI’s, actions and initiatives - all in one place will save you time switching from different information sources. 


The more advanced portfolio monitoring platforms offer customisable dashboards where you can view not only your fund performance but also your forecasting, the progress of your value creation plan, and your reporting and analytics which would be impossible with Excel. 



5. Simplifies your Board Reporting


According to a PwC report commissioned by the Private Equity Reporting Group (PERG) “Since March 2020 companies have experienced an unprecedented level of challenge and financial risk, and it is more important than ever that there is transparency in corporate reporting”.


We have worked with a few firms where they have a team of analysts working on just getting reports from every portfolio. They have 40 tabs in an Excel spreadsheet with at least 15 to 20 metrics that they want to track. Of course, the analysts do a fantastic job to create that report and it will go out every Monday, every month end, every quarter, and at year-end. But by the time the data is received, is it real-time, complete and totally accurate?


Software that can automatically integrate all the information you need to produce your Board and Investor reports will save you a great deal of time ahead of your investor meetings.


"It is more important than ever that there is transparency in corporate reporting"



6. Report and Track your ESG and sustainability KPIs

According to McKinsey “the linkage from ESG to value creation is solid indeed” and it is now front of mind for all Private Equity Managers.

The more forward-thinking solution providers offer integrations that can calculate your environmental, social and governance KPIs, automatically and all at once, making the tracking and analyses of sustainability goals easy and convenient.

This means that you can more easily control and manage your ESG strategy and improvement actions and initiatives across your portfolio, ensuring the sustainability elements of your investment strategy are firmly embedded into your value creation planning.


“The linkage from ESG to value creation is solid indeed”


Future-proof your portfolio monitoring and value creation

Given the increasingly complex nature of private equity portfolio management, having the right platform as well as the right strategies in place is crucial.

If you would like to explore how UNTAP by EXM could future-proof your portfolio monitoring and value creation, please get in touch for an informal, confidential discussion.


Get in touch



Further reading

What is portfolio monitoring in private equity?

Are you considering private equity portfolio monitoring software?

When is the right time to think about portfolio monitoring software?



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