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Improving Private Equity & Portfolio Management

Management of portfolio companies and internal operations of Private Equity firms has been changing dramatically.  Greater strides have been made to improve control, compliance, data and analysis, while actually reducing costs.   How are firms doing this?   This article outlines key best practices and trends which are helping PE firms improve their operations.

Portfolio Company Management & Reporting

Many firms employ staff associates to work with portfolio companies extracting data and information to monitor performance and perform analysis.   Despite deploying staff associates, this often becomes burdensome on the portfolio company management to extract data, compile spreadsheets and create mounds of reports which often go unused.  With the development of cloud-based applications, it is now possible to deploy solutions at a top level to gain access to information, while not disrupting the systems or management at the portfolio level.   One approach, which is rapidly growing is the deployment of products like NetSuite at a PE level.   This allows the firm to enable a cloud-based software for its own internal management while establishing additional companies which can receive data feeds from portfolio company systems for performance reporting.   The PE firm can develop custom, reports, performance metrics, dashboards, etc.  Cloud based products like NetSuite can be easily deployed/implemented at a low cost and give the PE firm the power of a leading ERP with full reporting capability of all its portfolio companies.  Reporting and dashboards of portfolio companies can be easily accessed from a smart phone, tablet or laptop while the PE professional is on the road.  Cloud based ERP applications also enable CRM capabilities allowing the firm to track deal flow and activities.  This approach can eliminate expensive CRM applications like Salesforce by consolidating data into one application and integrating it with your overall email contacts.

Security, Data Management & Technology

Lean operations are the norm for private equity firms and their portfolio companies.  However, the expanding knowledge and experience related to technology, security and data management is rapidly increasing.  This places high demands on resources since one person cannot know everything and places the organization at risk when relying upon few resources.  The high demand for technical resources also drives up the cost availability of supply.

One internal IT resources could cost as much as $120,000 per year with taxes, benefits, etc. and the organization is only limited to the knowledge of that one person.  In addition, the risk of resource loss is high and added costs are incurred at finding a replacement.

Managed services are the best and economical choice.  However, you need to evaluate the services based upon experience, knowledge and delivery of service.   When coupled with cloud-based technologies a managed services provider gives the organization a high level of security and reliability.

The following are some key indicators which are driving up costs for many PE firms & their portfolio companies:

  • Increased complexity and number of overlapping technologies and applications
  • Supporting skill sets require a deeper and broader knowledge base
  • Increased access and touch points are driving increased security and hacking threats
  • Higher demand for IT talent increases labor costs, employee turnover and recruiting costs

Outsourcing is not always the right solution.  What differentiates IT Managed Service Providers is how they deliver their services.  It is important a service provider supports the goals and aligns well with the culture of the organization. Key questions are:  Can the service provider be on site? Is my data maintained domestically? Do they manage my physical assets (laptops, phones, switches, etc.)?  Are they helping me optimize my cost verse services and risk?

The compelling best practices that has helped PE firms and their portfolio companies obtain the best value from their IT spending are:

  1. When making application, hardware and technology investments, do it centrally and make sure it supports an efficient business process. Avoid application overlap and strive for consolidation and standardization.
  2. When operating with a flexible and remote workforce, leverage tools and applications which promote efficient collaboration. (E.g. centralized document storage, instant messaging, etc.)
  3. Leverage your applications and infrastructure. Cut the cord on your phone system by deploying cloud based applications, or leveraging the standard storage of applications like MS365 which provides each user with 1 terabyte of storage with each license.
  4. Avoid “App Overload”. If you keep implementing “Add-on” apps to the software you purchased, it may be time to ask why you purchased the software and how it fits into the overall business strategy.
  5. If you have a small IT team (1-10), and you are finding it hard to attract and retain talent, outsourcing is an option. However, this is only successful if the provider has a seat at the management table and the delivery of services can be customized to fit into your operating style (e.g. local, on-site, remote, or hybrid).

SAGIN, LLC is a professional services firm with an IT Managed Services offering that provides full turn-key solutions to small and mid-sized business. If you would like to learn more about these solutions or to obtain a free assessment of your IT environment you can contact us at:  +1.312.281.0290 or   Also visit us at

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