Recently I listened to Ernst and Young’s NextWave Podcast, Why the CFO is becoming private equity’s quarterback. It is clear, now more than ever the top priority for Private Equity executives is data management. They surveyed 100 private market firms equally split between $15B+, $2.5B-15B, and less than <$2.5B AUM.
Based on the Ernst and Young 2020 Private Equity report and our own research and conversations within the industry, here are the top priorities for CFO’s driving innovation.
1. Prioritizing technology efficiency
CFO’s are prioritizing technology efficiency in 2020 to manage multi-asset growth, reduce margin pressures, provide better data transparency to their LPs.
- GPs have record dry powder and AUM. They are experiencing high pressure to put money to work and perform against peers while heading towards high market uncertainty.
- GP fees will continue to get scrutinized from LPs and GPs
- GPs with 2+ active funds and multi-assets are going to get faced with exponential data capture needs to meet LPs data demand. In parallel, GP’s will have to do more with less to maintain operational efficiency while balancing investor confidence.
2. Shifting from back-office to front
The CFO role is shifting from back-office focus to the front-end side of the business. CFOs are figuring out how to leverage data as an “asset” to their operations instead of it being a liability.
3. Transparent real-time data is now a necessity
CFO’s want to spend more time with portfolio companies and need real-time data from underlying investment holdings. Fully transparent data on both pre and post investments is critical to leveraging data of post-investment performance to create opportunity for active deal underwriting.
4. Unlocking the full value of your data and systems
CFO’s are asking themselves:
- How do we streamline manual reporting processes that are not value add?
- How do we get our data to proactively tell us what we should be doing or focusing on?
5. Talent Management
CFO’s are looking to showcase their investment in new technology as a strategy to attract better talent. Simplistic and intuitive technology is rapidly becoming the global standard. Private market technology is expected to make employees’ lives easier.
At Mercatus, our vision is total transparency across the entire investment lifecycle and investor ecosystem – from LP to GP to Portfolio Company and their underlying investments. Inevitably, the markets will continue to remain uncertain so focus on you can control, your organization’s data strategy and operational efficiency. Don’t let the foundation of your business crack under pressure, adapt the leading data architecture for private markets and come out on top.
If you’re interested in hearing more about these takeaways, let’s connect on LinkedIn.
To read the full EY 2020 Global Private Equity Survey click here.