A system of record every private equity manager needs
The below is a sample list of the situations frequently encountered in private equity deals:
It can take weeks to collate data for a sales process; add to that the countless unproductive hour’s lost chasing information.
Gaps in information are common:
Missing and/or incomplete contracts
Corporate Governance related issues (e.g. lapsed entities, missing entity records, lack of board minutes or necessary approvals etc)
Procedural filings not having been made in time or missing (e.g. tax related filings and/or clearances)
Cap tables not being up to date and requiring a time and effort to get ready.
All of the above result in some combination of: a) lost time, b) increased costs, c) material diligence findings, d) haggling with the buyer, e) price deductions, f) complicated contracts and g) onerous escrow or insurance requirements. This has a direct bearing on a manager’s IRR.
The problems above can be put down to the lack of a system of record tailored for private equity.
Private equity deals can be complex with many moving parts – corporate structures with numerous entities; cap tables with multiple investors and instruments; and, a plethora of underlying documentation. These moving parts largely reside in static documents and are fragmented. It is not an easy exercise to reconcile the corporate structures with the cap tables or underlying documentation. The problem is compounded when multiple versions of the same data points exist. This is precisely why issues get identified during an exit process under the scrutiny of a detailed due diligence process. A system of record can resolve these issues.
A system of record designed for private equity managers would:
Keep all the moving parts in one place and connected. The corporate structures would be linked to the cap tables and underlying documentation;
Flag gaps in information in real time, helping close our risks as they arise; and,
Remove duplication and enable decision makers with the right information at the right time.
It is time a system of record tailored for private equity managers puts an end to the inefficiencies that erode value. We have built DealsPlus Track as such a system. If you would like to know more, book a demo at www.dealsplus.io