Executives need to keep in mind an important facet: the transformation of an organization’s operating model is not a process that will ever really be ‘complete.’
New York, NY (PRWEB) April 22, 2013
Today’s private equity operations reflect a host of diversification strategies that not only kept many companies afloat during the economic downturn, but also represent a fundamental shift in their core business operating models, according to a new Ernst & Young report released today.
“Positioning for an upturn: The institutionalization of private equity operations” explores how a growing economy is creating new business opportunities for the private equity industry. At the same time, the shift to more complex operations requires increased sophistication of talent and resources to keep pace with client needs and compliance regulations.
“Nearly every firm is now faced with choosing the most effective tools, technologies and operational processes to support their people over the next several years,” said Samer Ojjeh, a principal in the Financial Services Office of Ernst & Young LLP. “Executives need to keep in mind an important facet: the transformation of an organization’s operating model is not a process that will ever really be ‘complete.’”
Ojjeh also emphasized how the private equity industry is leveraging these increased technological capabilities to better manage its companies and improve transparency.
These shifts offer many members of the executive team, especially private equity chief financial officers (CFOs) and chief operating officers (COOs), an invaluable opportunity to increase their visibility and clout within their organizations. Key areas identified by Ernst & Young include:
- As companies evolve from conducting core traditional back-office functions on an in-house basis to hiring outside consultants to manage a complex technology and reporting network, private equity CFOs will raise their visibility among executive leadership and external stakeholders.
- COOs are seeing their roles mature as their organizations strive to differentiate themselves from competitors by adding new functions and competencies to their suite of services. They now oversee and formalize these new business operations, including portfolio management, marketing and investor relations, and compliance.
- Many private equity firms have hired permanent chief compliance officers (CCOs) to ensure their professionals and investment activities adhere to firm policies and regulatory requirements. This trend is apparent in both the United States and Europe, where new regulations have underscored the need for professionals focusing on compliance issues.
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