Dynamics CRM Enables Increased Transparency For Private Equity Firms

This guest post is written by Microsoft Partner Customer Effective. 

Notwithstanding the financial crisis, Private Equity is still a heavily favored asset class of institutional investors, such as sovereign wealth funds, pension funds, and endowment funds, and individual accredited investors based on its expected low correlation to other asset classes and its expected attractive returns. Granted, its aura of prestige and exclusivity certainly doesn't hurt either. After reaching a seven year low in deal making in 2009, Private Equity transaction volume rebounded in 2010. More than 1,700 deals totaling $211 billion were completed in 2010, representing an increase of 142 percent over 2009 transaction levels. Despite the comeback, though, 2010's Private Equity transaction volume was still 5 percent lower than 2008 figures. Additionally, larger deals, often seen leading up to the height of the Private Equity boom in the summer of 2007, are now scarce. The only 2010 deal larger than $5 billion in size was the leveraged buyout of Del Monte Foods by a KKR-led group according to Bloomberg.

As Private Equity firms seek to raise capital and increase transaction dollar amounts, they are also experiencing an uptick in Limited Partner (LP) requests for more transparency, including a growing number of inquiries on the General Partner's (GPs) investment selection process, portfolio positions, risk exposure, methodologies for valuation, and other due diligence related matters. To earn investment contributions from LPs, GPs can no longer solely rely on stellar historical track records, given Private Equity's more recent modest returns. To meet increasing LP demands for greater transparency and to more effectively capture and retain assets, Private Equity firms should invest in and implement Microsoft Dynamics CRM.

The robust and reliable deal management functionality of Microsoft Dynamics CRM allows Private Equity firms to improve deal team member communication and collaboration, streamline dealmaking evaluation and execution processes via customizable automated workflows, and more efficiently collect, track, manage, monitor, and report on the following:

  • Fundraising efforts and campaigns
  • Potential and current investors and commitment amounts
  • Prospective and existing deals, deal status, deal evaluation activity history, and deal sources
  • Fund communication and investor documentation, including capital call or distribution notices, Private Placement Memorandums (PPMs), Offering Memorandums (OMs), LP Agreements, side letters, institutional RFPs, proxies, and annual meeting notices
  • Emails, calls, and meetings with LPs and other key contacts, partners, vendors, and external relationships

Familiar user interface fosters user adoption and increases dealmaker productivity and response times to inquiries.

Private Equity shops can leverage Microsoft Dynamics CRM as its data infrastructure hub and integrate it with its middle and back-office systems. Doing so will consolidate data and lead to a higher level of transparency. Microsoft Dynamics CRM integrates not only with third-party applications, but also with other Microsoft offerings, including Outlook. The intuitive, familiar look and feel of the Microsoft Dynamics CRM environment results in easier navigation, a quicker learning curve, lower training costs, and higher user adoption rates for deal team members. In addition, dealmakers often on the road can easily access Microsoft Dynamics CRM remotely and even from a mobile device via the CRM Mobile Express extension. Thus, deal team productivity is drastically increased. Since they now have a centralized repository to track investor correspondence and interactions along with deal opportunities and evaluation activities, Private Equity firms no longer have to search through multiple systems to locate answers to the growing LP demands for information. The firm overall will be more prepared to handle LP requests and inquiries, and the ensuing response times will be significantly reduced. On demand, CRM users can quickly produce and provide LPs with detailed, comprehensive reporting to enhance client service and create more transparency, which in turn will help grow and preserve assets.

Customer Effective has tailored Microsoft Dynamics CRM exclusively for Best-in-Class Private Equity firms with its Capital Effective suite of solutions. To learn more about how this central, collaborative and comprehensive xRM platform and productivity enhancer is designed to help Private Equity firms address demands for greater transparency and achieve their goals now and in the future, please visit www.capitaleffective.com.

By Kevin Wessels, solutions consultant at Customer Effective.

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