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EY-Parthenon wealth and asset management consulting teams help clients improve their investments’ value through strategic opportunities and threat identification for a sustainable future.
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Value creation is at the core of every transaction investment thesis. Our team supports private equity firms throughout the investment lifecycle from origination to exit. We bring deep sector, operational and functional experience to identify investment risks and opportunities focused on cash and profit levers to make an investment successful.
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The results of the 2023 EY Global Private Equity Survey continued to reflect that theme. In the survey, 76% of the largest firms said that both finding and retaining talent are critical, while 60% of smaller firms emphasized the importance of hiring the right talent.
But focusing on talent management has been just one of the evolving roles private equity CFOs have embraced over those 10 years. CFOs also identified several other factors as key to asset growth, such as seeking additional sources of capital and expanding product offerings to deliver a more diversified product mix.
Many private equity CFOs, especially at larger firms, also play a major role in leading their firm’s technology transformation. In a digital environment, those CFOs who can combine data with a strategic mindset are the ones best positioned to help drive growth. This transformation has led to a major shift in responsibility, especially at the largest firms. CFOs now are expected to spend less time overseeing tactical work, such as audits and valuations, and instead focus on delivering value to other managing directors and creating and evaluating strategic transaction options.
Given the changing demands of the industry, the ideal private equity CFO has had to become both tech savvy and data focused. These skills are increasingly critical in a volatile macro-economy where the spend on these tech functions in a dynamic environment delivers a vital benefit by continuing to allow firms to be more efficient and delivering usable and actionable data for investors and managers alike.
Even with the investments of the past three to five years, however, only 27% of the largest firms considered their overall platform to be highly automated. We have noted in previous surveys that CFOs have helped invest in the private equity fund process, and they have recently begun investing into management company and general partner functions. With ever-changing technology solutions, investments in automation and operational efficiency are continuing with an eye on supporting growth and achieving fiscal goals, as well as generating reporting that will help stakeholders make better decisions.
Given their depth of resources, it’s no surprise that the largest private equity firms are leading the technology transformation within the industry. On the investment side, the ability to rapidly and thoughtfully analyze data to make better investment decisions has emerged as a trend at most of the largest fund managers.