Driving Success in Private Equity: A Unified Approach to Portfolio Performance and Growth

Private Equity (PE) firms operate in a complex and dynamic environment, where the ability to make informed decisions quickly and efficiently can significantly impact the success of their investments. Without a cohesive view of their portfolio performance, PE firms face numerous challenges that can hinder their ability to generate returns, manage investments effectively, and scale operations. 

Portfolio Management Challenges Impacting Growth

PE firms that rely on a patchwork of different accounting and ERP systems across their portfolio can encounter inefficiencies when measuring consolidated business performance — both for the overall firm and at the individual company level. This fragmentation results in a lack of real-time visibility into financial performance, operational metrics, and market trends, which are crucial for making strategic investment decisions. Consequently, PE firms may struggle to accurately assess the health and potential of their investments, impacting their ability to identify opportunities for value creation and growth.

In addition, operational inefficiencies affect the firm’s ability to expand its portfolio. Without a structured, repeatable approach, integrating new companies becomes a significant effort, taxing scarce resources, slowing down potential deal flow, and hindering growth. The lack of a unified platform means PE firms can find it even more difficult to expand into new markets, business models, systems, and processes.

According to BDO’s recent Private Equity Portco CFO Outlook Survey, 55% of PE CFOs say the talent shortage is the same or greater than it was one year ago.

PE firms operate in a highly regulated environment, where compliance with financial regulations and standards is paramount. Diverse accounting and ERP systems make compliance and risk management significantly more challenging. The differing processes and structures across these systems, along with the need to secure data in the event of a data breach, complicates efforts compared to using a single, unified system.

Enhance Private Equity Performance With BDO and NetSuite

BDO can help PE firms generate substantial returns, mitigate risks, and enhance the value of their investments. This includes helping firms implement a strategic approach to value creation, operational efficiency, and risk management throughout the investment life cycle. BDO’s multidisciplinary team and global network, combined with the technological prowess of NetSuite ERP, offer a comprehensive solution that addresses these challenges head on.

NetSuite ERP: The Technological Backbone

NetSuite ERP stands out as a robust solution tailored to meet the unique needs of PE firms. Its cloud-based architecture offers real-time visibility, scalability, and enhanced operational efficiency, making it an indispensable tool for managing investments and driving growth.

Unified Data and Real-Time Reporting

Whether and organization is consolidating companies under a single parent or building a portfolio of independently run organizations, an ERP — like NetSuite — provides a unified platform to manage financial and operational performance while providing real-time access through powerful dashboards, reporting, and analytics of the entire portfolio. It also allows users to sort that data by group, region, and individual company. This visibility, standardized across the portfolio, helps organizations uncover issues and opportunities in real time.

Scalability and Flexibility

As PE firms grow and their needs evolve, NetSuite's scalable architecture allows for the easy addition of new functionalities or modules. It also controls costs, as new functionality can be added when needed. In addition, NetSuite has developed industry editions built on years of best practice experience for companies in high tech, software, services, life sciences, manufacturing, food and beverage, wholesale distribution, and more.  

As new investments are made, a templated approach to NetSuite deployment means acquisitions are integrated into the firm’s operating model quickly. In addition, the system’s built-in business processes automatically update and deploy best practices into the new company. This helps ensure that key business processes are automated, manual workarounds are reduced, and error rates are lessened, leading to improved efficiency and reduced operational costs. This includes international acquisitions and subsidiaries with financial consolidation, reporting, foreign exchange, and tax compliance supported in over 100 countries.

Firm security policies — along with NetSuite's robust security features — are implemented with each deployment, mitigating the need for a patchwork approach to data security and integrity across disparate systems, further helping to ensure compliance and regulatory requirements are met.

Exit Strategy: Acquisitions, Carve-Outs, and IPO Readiness

More PE CFOs plan to execute carve-outs or divestitures this year (21%) vs. last year (13%), and their expectation is for the return to a stronger IPO market as interest rates ease.

Demonstrating financial and operational control is critical to investors, whether they are a potential acquirer or in the public markets. ERPs, such as NetSuite, demonstrate that maturity, provide historical performance, and lay a solid foundation for investment decisions.  

The combination of BDO's strategic advisory services and NetSuite's technological capabilities offers a powerful solution for private equity firms aiming to navigate the complexities of the financial sector successfully. BDO’s partnership with NetSuite enables PE firms to enhance operational efficiency, make informed decisions, and drive growth, ultimately enhancing the value of their investments. By leveraging BDO's experience and NetSuite's ERP platform, PE firms are well equipped to achieve high performance across the investment life cycle, demonstrating differentiation and positive outcomes to their partners.