The current COVID-19 pandemic has both private capital investors and fund managers out of ‘rhythm’ with the way they operate and communicate amid increased investor concerns and scrutiny. This has cascaded into unparalleled number of inquiries and ad-hoc requests to fund managers asking for greater transparency and more timely financial information, such as valuations, exposures and impact to profit allocation a.k.a. carried interest. This also has potential systemic impact to the longer-term private capital industry integrity and trust.
For most fund managers, this has put a huge strain on their finance and operation staff, systems and operating model. The Waterfall calculation and the associated administration tasks are well recognized as crucially important in the private capital industry, as it dictates investor profit allocation and rewards the manager for a job well-done.
To free up your team’s precious operations and financial resources, we offer a digital, automated Waterfall solution to calculate and administer your carried interest on a fund, investor and deal level. This solution is offered as a primary, integrated waterfall fund administration platform or as a Shadow Service to validate your waterfall calculations administered by your staff or outsourced service provider. Our cloud platform solution is easy to integrate into your current workflow and will reduce your dependency on Excel and ‘key-person’ risks, aiding in audits and succession planning. While Excel is familiar and relatively simple, it is error prone e.g. small mistakes in entering data, formulas or formatting cells can lead to disastrous results in financial disclosure and perhaps, even a firm’s reputation. Additionally, this will increase the transparency around carried interest, both from an internal allocation and investor perspective, providing clean, consistent record-keeping and higher-quality data processes. Furthermore, with our sophisticated carried interest models that handles all the nuances and complexities of waterfall arrangements, it allows you to optimize your carried interest, without over simplification that is often the case with Excel-based approaches, that can lead to the difference between a firm’s partners receiving carry or perhaps not at all. With the automated systems higher detail and accuracy, partners are positioned to be paid earlier, avoid time-value loss and minimize investor claw back provisions.
Now, more than ever, is the opportunity to embrace digitalization and in particular, waterfall automation, to build higher investor confidence and trust, and position your firm for success through and post COVID-19.
For more information, please visit our web page www.acordiq.com. If you interested in augmenting your finance / operations staff and taking advantage of our private capital waterfall subject-matter experts, please contact us at firstname.lastname@example.org.