Private Equity firms have complex internal operations and continue to rely too heavily on spreadsheets, email, and disparate application software to track their internal operations. Adopting a task management system can streamline the workflows across multiple teams and provide greater visibility of each team’s performance. Greater transparency ensures that any bottlenecks can be easily identified and addressed, strengthening organizational transparency and efficiency.
Private Equity (PE) firms’ operational efficiency is critical in determining their success, especially against shifting market conditions. PE firms typically have complex inter-departmental processes managed through Excel spreadsheets, email communications, and other disparate applications. While Excel and Outlook are essential tools, an Enterprise Task Management system is far more effective in organizing tasks, providing a centralized place to see the status of critical path items, and creating an optimal Private Equity foundation for your overall success.
FinServ has spent 18 years working with our clients to enhance their business processes. In the past few years, we have focused on assisting our Private Equity clients in Private Equity in leveraging task management software to address some critical areas of their operations. From this experience, we have gained great insight into how a PE firm’s internal operations can be classified into six main stages and how task management tools can optimize their operations on a day-to-day basis:
|Private Equity Operation||Operation Description|
|1||Fundraising||The IR team performs many tasks with prospective investors during the fundraising process. Timely responses to Investor inquiries are critical. Often the requests can be quite complex and involve several departments in the fund. Ensuring each task is laid out for the IR and other team members and ensuring they can mark the tasks complete ensures that all steps are handled efficiently. In contrast, key senior members can easily check in on the status of any prospect in real time.|
|2||Deal Sourcing||As a PE Fund sources deals, they will repeat the same steps with each deal collecting and sharing critical documents through that process. Leveraging a task management tool with linkages to a document management system like SharePoint ensures that Deal Team members can efficiently review and approve critical documents while staying current with the latest activities in the deal sourcing flow. A system automatically notifies key deal team members and related departments as specific critical milestone tasks are met is essential to successfully closing a deal.|
|3||Deal Management||As the deal progresses through the latter stages of the flow, the operations, legal, tax, and cash management teams need to play a part in getting the deal to the close date. Ensuring that every deal has a consistent list of tasks and that the person responsible is always tagged to the task and reminded when they need to perform their role ensures that every deal can be handled effectively and efficiently.|
|4||Portfolio Management||Effective portfolio management is crucial for PE firms to monitor their investments carefully and ensure high returns for their investors. Typically, PE firms rely on spreadsheets and ad-hoc communications to track essential tasks such as entity management, compliance, etc., which can be error-prone. The task management tools can streamline the tasks, track the entity setup and compliance obligations, and implement a uniform workflow approach across different regulatory jurisdictions. This simplifies compliance, mitigates risk, and saves time.|
|5||Reporting||PE firms must prepare reports for multiple stakeholders, I.e., internal executives, investors, regulators, etc. To prepare comprehensive reports, internal coordination between the deal execution, investor relations, fund accounting, and cash management teams is required. The task management tool can serve as a central platform for teams to coordinate their tasks and share documents via the integration with SharePoint etc. Additionally, a task management system can produce graphics and visualizations on multiple metrics, providing valuable insights about a workflow’s progress and resource planning.|
|6||Accounting & Reconciliations||Typically, PE firms use multiple accounting software for reconciliation processes and record maintenance. The reconciliations occur weekly, monthly, and quarterly to ensure that all systems are accurate. In large PE firms, different teams are often responsible for managing specific systems. Often funds use many de-centralized methods to communicate about these critical tasks. Valuable energy and time are wasted trying to find the latest email or DM related to a task. Using a centralized reconciliation project in a Task Management system, users can streamline the tracking processes involving multiple systems, break down workflows into smaller tasks, assign those to specific team members, and set due dates. This provides one place to see the status of all reconciliation work.|
Through our work with several Private Equity clients, we have found that the success of implementing an Enterprise Task Management system comes down to a few critical success factors.
- Ease of Use & Implementation – Sophisticated workflow tools can provide great automation to operations. However, these tools are highly complex and take many months to implement. They often require very technical resources to set up and code solutions. Task management tools offer a simple, intuitive setup that results in implementing a solution in days or weeks, allowing users to see results quickly.
- Super Users Drive Adoption – Business users can quickly learn how to set up their projects in a Task Management tool, becoming early adopters who share their successes with other groups. Users have set up issue-tracking projects that have quickly spread to several other departments when they share their success stories.
- Cross-Departmental Collaboration – One client was struggling with the coordination of onboarding employees between their HR and IT departments. The HR team leveraged the Task Management tool to share the new hire process with the IT team. The IT team created its project, which tracked each detailed step of setting up a new employee, including communications with external parties. The new process resulted in a streamlined process where every new employee gets what they need to succeed, resulting in a great first impression of a process often filled with issues at many other firms.
- White-Glove Support – Even if a system is simple to implement, it does not mean every user can handle it independently. Our firm focuses on providing users with all the support they require, including helping them to model their project if desired and providing them with helpful best practice approaches to everyday task management items. When a client has a question about how to do something in the system or something is not working the way they expect, we respond immediately, ensuring they maintain their enthusiasm for the system. Eventually, the users become self-sufficient, but early on, we make sure they have a large degree of handle holding and support.
The Task Management Tool Marketplace and Deciding What Tool is Right for Your Firm
Different types of task management software tools are available in the marketplace. While some are free and relatively simple, others need to be bought and can be deployed firmwide. We have found that the best Task Management tools provide these core capabilities:
|Functionality||Description||PE Usage Example|
|Rules Automation||The ability to create simple if-then scenarios in the tool will support things like notifying someone when a task is overdue or moving completed tasks to an archive.||Notices for Deal Closing Funding Requirements|
|Forms||The ability to leverage forms for projects like IT Tickets or issue trackers creates a detailed request or item with key characteristics.||PE Data Issues Tracker|
|Automation for Recurring Tasks||The ability to set a Task or a set of Tasks to recur on a set periodic basis either by a specific date or when all the previous tasks have been completed.||Fund Accounting Quarterly Reporting Requirements|
|Auto Updates to Due Dates
||The ability to automatically update due dates on tasks when one key date changes.||Deal Closing workflow
|Advanced Security Controls
||The ability to set access to a project or a set of tasks. The ability allows edit access to a subset of fields by user role.||HR Hiring / Onboarding project|
|Integration with Key 3rd Party Applications & APIs
The ability to integrate with email/calendar to track key tasks or to feed tasks from a received email.
The ability to integrate task updates with Teams or other DM systems.
Integration with SharePoint Online or other document management systems to link documents to tasks while maintaining the core security of sensitive documents.
The ability to leverage an API to pull data from external systems and update the tasks in the Task Management system.
Investor ad-hoc reporting requests
Investor GDPR PII document tracking
Credit Facility Management
Outside of the key benefits from our extensive work in this area, we have found that there are three main benefits of using task management software for a PE firm:
Given that PE firms receive information from various sources – third-party vendors, market data providers, disparate internal systems, and ad-hoc data dumps – it is essential to translate all the relevant information into clearly defined workflows in a task management system. The structured workflow enhances operational efficiencies and provides greater transparency, which is especially important when multiple tasks require inter-departmental cooperation, e.g., when a deal closes, in addition to the Deal Execution team, Tax, Legal, Valuation, and Cash Management teams, etc., need to be notified. Different teams can track their combined workflow and easily compare each other’s progress in the task management system.
Task management systems can also accommodate the underlying dynamics of a workflow by providing capabilities such as approval tasks, dependencies, etc. For example, if the post-deal closing workflow cannot be started until a deal is closed, the workflow can be structured for the post-closing workflow to be triggered only after a deal is closed. Similarly, approval tasks can be created so that unless a task has been approved, the user cannot progress to the following task. Typically, these are ‘soft blocks’ that can be overridden but are crucial in preserving the workflow structure.
Private Equity firms use multiple tools to track their operations. For example, many PE firms track the Deal from inception to its funding in Salesforce or other CRM systems.
Most of the clients we have implemented task management systems used to track this info in their email systems which could have been more efficient and decentralized. After our implementation, the task management tools connect with different software, such as Salesforce, to ensure the Deal information flows automatically into a central place where all deals and statuses are tracked. When a Deal is funded, it flows into the task management system in a pre-defined workflow and alerts the relevant teams to complete the assigned tasks.
Where email can come in handy is to notify a person when they have something important to take care of in the task management system. Task management systems provide more intelligent connectivity with email communications. Through their built-in integrations with Outlook, Gmail, etc., emails can provide detailed information from the task management system and link the user directly to the task they must act upon.
Some PE teams, like Investor Relations, constantly receive emails from investors and prospects. Many task management tools allow emails to be forwarded to a specific project. They can intelligently scrape critical information from the email to automatically create a task for the IR team to act upon. By providing the ability to translate emails directly into tasks, the task management systems significantly reduce the manual effort required to distill the information into actionable items and assign it to individuals as needed.
Task management tools can also integrate with file-sharing software such as SharePoint Online. Private equity internal operations rely heavily on spreadsheets housed in a central location, e.g., SharePoint. Task management software can integrate with SharePoint, allowing users to attach their files, located in SharePoint, to the workflow as needed. Users can easily be redirected to the SharePoint file through the task management software whenever they need to access the files while completing their tasks. Task management tools can maintain the same privacy rights as SharePoint, thus protecting the security of sensitive documents.
Practical task management tools report essential metrics in real-time, allowing users to draw insights about any workflow’s progress. For example, a task management system can produce graphics and visualizations on multiple metrics, such as the number of tasks completed, the number of tasks assigned to a specific user, etc. This allows an executive to quickly see projects or processes in trouble or critical staff members whose workload is too heavy.
Teams can use these reports to easily track the overall project’s progress and gauge individual members’ performance. For example, through sorting and filtering capabilities, the task management systems allow the users to filter the tasks by an assignee and check if they have completed them on time. Additionally, if a task remains incomplete beyond the due date, it will be highlighted, and the assignee will be notified accordingly.
Moreover, these reports can easily be exported from the system. Flexible reporting options allow users to customize the reports according to their needs. This provides a quick and effective way to fully understand the workflow’s progress and ensure that delays can be identified promptly.
Private Equity firms have complex internal operations and continue to rely too heavily on spreadsheets, email, and disparate application software to track their internal operations. These methods could be more inefficient and error-prone, and valuable energy and time are often spent searching for the data to verify its accuracy.
Adopting a task management system can streamline the workflows across multiple teams and provide greater visibility of each team’s performance. Centralizing all tasks in one system makes it easy for line-level staff or senior executives to get the information they require quickly. Greater transparency ensures that any bottlenecks can be easily identified and addressed, strengthening organizational transparency and efficiency.
About FinServ Consulting
With over 18 years of working with the top Private Equity funds in the industry, FinServ has the technical and business expertise to help your fund select and implement the best task management system for your requirements. Contact us to find out how quick and easy it can be to streamline your fund with FinServ’s industry and task management experts.