Client
Private Equity firm based in Los Angeles, California. Target investments up to $25m EBITDA and up to $250m enterprise value.
Requirements
Create a centralized and flexible data system that allows for dynamic and easy access to fund data, without replacing existing systems.
Solution
Jedox, a CenDat Solutions partner, provides a multi-relational database that allows access via an Excel® Add-in, web application, or on mobile devices.
Results
Instant access to detailed fund data using familiar Excel® interface allows for creation of ILPA conforming reports, automated call notice generation, and full control over data. Eliminates costly and error prone manual data updates. Works alongside existing company systems, decreasing adoption pain from employees.
Private Equity Data Challenges
Is spreadsheet chaos crippling your financial reporting capabilities? For a small private equity fund based in the heart of Los Angeles this was definitely the case.
Many Private Equity firms maintain their Fund level accounting activity in unsophisticated accounting packages. This is a normal practice, as the core accounting requirements typically do not justify using more sophisticated and expensive packages. However, it does leads to challenges resulting from manual processes due to a lack of automatic access to detailed underlying investor data. Meeting investor level internal and external reporting obligations becomes extremely inefficient, or sometimes even impossible in the format being requested. The need for tracking detailed data at the LP level creates inefficiencies throughout the process, including:
Maintenance of numerous complex data tracking spreadsheets with manual updates to data each period.
Time consuming production of reports to support investor related requests.
Difficult to produce ILPA reporting templates and detailed investor capital account statements (institutional investors requests for access to more detail is becoming the ‘norm’).
Manual data entry into numerous process spreadsheets (including waterfalls, IRR, MOICs and other KPIs).
Numerous locations and forms of data.
A lack of data integrity and data inconsistencies.
Having numerous manually updated spreadsheets with various sources of data can cripple productivity, efficiency and accuracy.
Customer Objectives
From the outset, a key requirement for this project was to ensure the core accounting system remained in place. This was necessary to ease transition for the team and increase adoption of the new system/process by limiting disruption to their normal accounting processes. With this constraint in mind the primary objectives were:
Create a centralized single source of data that is accessible dynamically through Excel® and the web.
Enable direct access to detailed data (by LP) for all internal and external reporting requirements,
Enable production of detailed investor capital account statements, and meet ILPA guidelines for Call/Distribution templates and activity reporting,
Automate supporting work processes, including waterfalls, carry calculations, IRRs/MOICs,
Enable multiple user access
Implement a flexible solution that allows for further expansion and use – including Portfolio Company Tracking and Financial Consolidations & Reporting.
Searching for Solutions
After reviewing several software options, Jedox, a CenDat Solutions partner that provides a multi-relational database incorporating dynamic links into Excel®, was chosen for the project. Jedox provides controlled, role-based access to a single source of truth via a powerful Excel® add-in for desktop, web application, and mobile devices. The Jedox multidimensional database leverages the latest in-memory computing technology and guarantees lightning-fast calculations for complex enterprise applications.
The flexibility of Jedox allowed the development of sophisticated solutions for numerous business processes, including Fund Data Management, Financial Consolidations, Portfolio Company Tracking, Budgeting and Planning, and more.
Results
A Fund Management Data Application, using the Jedox platform, was developed to work alongside the existing accounting system. Allocation methodologies allow data to be automatically allocated down to the LP level for all transactions. All reports are dynamically linked to the centralized database and automatically updated as new data is entered. Dynamic Waterfalls, Investment Summaries, IRR’s, Performance, ILPA Call/Distribution notices, detailed Capital Account Statements and numerous more reports were developed, all linked to the centralized data source.
Inefficiencies were eliminated, reporting capability significantly enhanced, work processes automated and ILPA requirements met. These improvements allow the CFO and accounting team to be far more effective in their reporting duties and allow for a greater transparency of data company-wide.
If you are suffering with Fund Data Management frustrations, please contact us.
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