How to Build a Private Equity Portfolio Reporting Platform

How to Build a Private Equity Portfolio Reporting Platform

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You’re an Associate. You’re tired of constantly fighting with emails and spreadsheets for basic reporting on portfolio company performance, and you finally convinced the powers-that-be to invest in a reporting platform.

Maybe you’re a Partner. You’re tired of checking in withyour firm and listening to the grumbling of tortured MBA-toting Associates stuck doing data collection of portfolio company KPIs.

You’re in luck, though – you’ve decided to move forward with Baromitr as an automated reporting solution. Maybe it was the highly-customizable and interactive analytics , or maybe it was the ease with which Baromitr drives value creation by giving portco managers access to curated performance benchmarks. Maybe it was the robust user management and security protocols. No matter the reason, the great news is that the ink is dry and you’re ready to build…

…but where do you even start? 

Here are some recommendations for you as you build out your reporting platform.

Identify Key Metrics and Calculations

The amount of data in your portfolio is growing rapidly, and most of your companies are using different accounting systems, different ERPs, and different CRMs. The first question before building anything in your Baromitr group is: which key metrics do you want reported?

If you are already conducting manual reporting via spreadsheets, this should be a simple task. Find the most meaningful metrics from your existing reports and get ready to import.

If you are not conducting any comprehensive reporting, begin by considering what information your General and Limited Partners value when they make investment decisions. Then, consider what information your portfolio company managers value for making their critical decisions. If there are any common KPIs between those two lists, those are must-haves for your Baromitr group. Use your discretion on any others, keeping in mind a core law of data collection – the more you ask for, the more likely something is to fall through the cracks. Keep your reporting succinct and efficient by only targeting those metrics which produce truly actionable insights.

Keep your required metrics succinct and efficient to prevent data fatigue.

Once you’ve established your core reporting metrics, it’s time to coalesce calculation methods. Usually, by the time private equity teams reach consensus on the KPIs to track, this is a moot point. However, if your portfolio company operators tend to provide metrics with variable intermediates, you may want to build your input fields around the intermediate metrics, rather than the finals.

For example, consider Customer Acquisition Cost (CAC), a critical sales growth metric for most SaaS companies, especially startups. At face value, it is deceptively simple: CAC is the total cost of sales and marketing divided by the number of customers acquired. If you want, you can simply ask company leaders to report their final CAC to you.

What happens if your portfolio companies all use different inputs, though? Could they be excluding travel expenses for their enterprise reps? Are they in a shared services model where marketing expenses aren’t fully included? Does the number of customers include upsells and cross-sells? 

Rather than asking for users to submit their own calculated Quick Ratio, this group requires Members to submit the inputs for the calculation and relies on Baromitr’s calculations for the benchmark metric.

In situations where you may doubt the consistency of calculation, we’d advise building your Baromitr group to accept the inputs to the calculation and use Baromitr’s baked-in auto-calculation tools to guarantee consistency.

Establish Group Structure

Baromitr’s platform comes with user management, but you’ll need to decide who in your group takes on which role in your organization. Here are some quick recommendations:

  • Sponsors: that’s you, the Group admin. Note that you can have as many people in a Sponsor role as you’d like, so feel free to add associates as necessary. Sponsors are the only role with the ability to export group benchmarks.
  • Observers: these are accounts with access to the group benchmarks but cannot add or change any data. This role is ideal for GPs, LPs, or Operating Partners who will want access to the report but don’t need admin controls.
    • Tip: there’s no limit to the number of users in an Observer account, so you can create a single Observer account and add users to it. If you designate one of your associates or analysts to this account, they can take care of adding or removing partners as needed.
  • Members: these are your portfolio companies. There are multiple levels of user access in each group member.
    • Data Leader: this is the VP, CEO, or Managing Director of the portfolio company. They have access to the benchmarked report as well as the ability to edit reported data.
    • Participant: this is any member of the portfolio company you want to have access to the report results, but not give access for data entry. This is ideal for company leadership teams (Directors, Senior Managers).
    • Data Entry: these users have access to the data entry sections of the application, but cannot see the reported data once submitted. This role is ideal for financial analysts/managers and executive assistants at the portfolio companies. 

Develop Your Go-To-Market Strategy

At this point, you may be asking “Go-To-Market? Isn’t this a reporting tool?”

You are correct, but you’re still going to want to consider using some of the same tactics for your internal launch as you would if you were launching a new SaaS product. Some things to consider include:

  • Create a training and onboarding schedule that includes one or two webinars or training sessions with your associates, analysts, and with your portfolio companies. 
  • Write and distribute an offline, group-specific product guide for your associates and portco managers. This guide should include information on how your users login, how they add data to report, and how they access the report after each instance goes live.
  • Feel free to use Baromitr’s general product guides and FAQs to supplement your product guide and training!
  • Ensure that your group’s timelines are clear and available to all Sponsors, Observers, and Members. We typically recommend no less than 2-4 weeks of internal prep time with your portfolio companies before opening up your first Baromitr instance
  • Develop a communications plan. Baromitr provides a 3-stage customer onboarding service for all groups at launch, but you may also want to craft an email or two that explains requirements, deadlines, and designates a contact person on your team who’ll serve as your group admin.
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Even though Baromitr will provide onboarding and internal marketing support, you may want to develop your own go-to-market communications plan to ensure successful rollout.

Launch, Listen, Learn, and Leverage

Once you’ve taken care of the preceding steps, you’re ready to launch! As a new product owner, though, you’ll want to follow the 4 L’s of product launches

  • Launch: For most SaaS businesses, new product launches are a delicate dance between your engineering and development teams, your sales and marketing teams, and your product managers. If you have different associates handling different roles, make sure that launch responsibilities are clearly defined and that you have an open communication channel for the first few days that your users are reporting data. 
  • Listen: Your firm’s Partners, Associates, and your portfolio company managers are smart – they’ll have a strong opinion about the group’s launch and architecture after the firsts instance. As the group Sponsor, make sure you take some time to listen to their feedback – take copious notes! You may want to plan a formal review with your internal stakeholders 1-2 weeks after your product launch to collate notes and feedback before you have your 30-day review with the Baromitr setup team.
  • Learn: all of the feedback in the world won’t mean much if you and your team aren’t prepared to build on it. Are the questions being asked in the right order? Are there fields missing that would create more meaningful filters for recalculation? Are uploads and manual entry interfaces configured to make this easiest for data entry? Baromitr’s reporting platform is highly customizable and very malleable, but without good learnings from your initial product launch it will be difficult to ensure success in the long run with the new reporting tool.
  • Leverage: you’ve launched, you’ve listened, and you’ve learned. Now it’s time to leverage that learning into modifications and enhancements. Take what you’ve learned and build a road map for future enhancements, and make sure to share these with your Baromitr support team so they can help (or let you know when Baromitr’s engineering road map will augment yours).

Conclusion

Although it may seem daunting at first, the road to a successful launch of Baromitr as a portfolio company reporting tool is straightforward. There are tremendous insights trapped in your portfolio’s data, so don’t delay making that available to your team and to your portco managers.

If you have any questions about this guide, or how to bring Baromitr’s portfolio reporting tool to your firm, contact us to learn more.

Sam Giffin
Sam Giffin
Baromitr CDO and Co-Founder

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