Ernst & Young Report: Private Equity Operations Must Evolve to Meet Demands of Growing Economy

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The improving economy calls for fundamental changes in companies’ private equity operations to better answer the demands of their investors and compliance standards by bringing on new specialists, tools and technologies.

Ernst & Young delivers new report on evolving private equity operations
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.’

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.

Click on the full report to access our interactive graphic and watch the video to learn more.

“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.

About the Ernst & Young Global Asset Management Center
The asset management sector is facing a number of fundamental challenges. These include changing customer demand, the need to innovate, downward margin pressure, the rising tide of regulation and investors’ increasing focus on governance. In response, the sector is restructuring, developing new products, improving risk management and seeking greater efficiency. Ernst & Young’s Global Asset Management Center brings together a worldwide team of professionals with deep technical and business experience to help you achieve your potential. The Center works to anticipate market trends, identify the implications and develop points of view on relevant sector issues that support our assurance, tax, transaction and advisory services. Ultimately, it enables us to help you meet your goals and compete more effectively. It’s how Ernst & Young makes a difference.

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About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit Ernst & Young LLP is a member firm serving clients in the US.

This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients.

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