Fail to plan. Plan to fail.
Why Financial Planning & Forecasting (FP&A) is more important than ever in Private Equity.
We take a look at why utilising EPM tools within the PE industry can help business create new revenue streams, optimise current ones, and add more value to their portfolios than ever before.
Introduction
Introduction
The private equity (PE) industry has been on an upward trajectory for several years, with a remarkable amount of capital flowing into this sector. As the industry evolves, so too does the importance and complexity of financial planning and analysis (FP&A). Traditionally a staple of corporate finance, FP&A is now becoming increasingly relevant in private equity, providing crucial insights into investment decision-making, portfolio management, and exit strategies.
Shift in the Private Equity Landscape
Shift in the Private Equity Landscape
The PE industry is experiencing a paradigm shift. Today, it’s not just about identifying promising investments and implementing leveraged buyouts; the emphasis has shifted to adding tangible value to portfolio companies.
Furthermore, the increasing competition and rising valuations have led to a need for more sophisticated financial management strategies. This shift has propelled the importance of FP&A, as it offers a comprehensive view of a firm’s financial health, performance metrics, and areas for improvement.
Here are just a few use cases:
Here are just a few use cases:
Internal Planning
Internal planning is a critical function within organisations as it helps align financial goals with the company’s strategic objectives, enables effective resource allocation, and facilitates informed decision-making.
Investment Decisions
Robust financial analysis aids PE firms in selecting promising investments that align with their investment strategy and risk tolerance.
Portfolio Management
PE firm’s goal is to create value within that company. FP&A aids in developing and implementing financial strategies, budgeting, and forecasting – all of which contribute to value creation.
Exit Strategy
FP&A plays a crucial role by providing insights into the optimal timing and method of exit. Through scenario analysis and financial modelling, FP&A can help estimate the portfolio company’s future performance and worth, supporting PE firms in maximizing their return on investment.
Adapting to the Digital Age
Adapting to the Digital Age
In the era of big data and advanced analytics, PE firms are now leveraging technology to gain more profound and faster insights.
Planning software such as Anaplan and Pigment can help such firms gain a competitive advantage by automating financial analysis and providing predictive insights, allowing FP&A teams to make more accurate forecasts and make data-driven decisions.
Should Private Equity companies consider investing in a planning solution like Anaplan or Pigment?
EPM software can come in many different forms, and with so many options around, there are two key standout options when it comes to planning software.
Private Equity companies face a unique challenge, so let’s explore what these systems can provide to resolve the potential issues.
Implementing EPM isn’t cheap – but it pays for itself!
Implementing Anaplan or Pigment does come with costs, such as licenses from the vendor, and having a trusted partner to implement the technical aspects of the system correctly. Getting it wrong can be time-consuming and costly, which is why it’s worth talking to professionals with many years of experience implementing these systems, such as Bolt Consulting.
However, when it’s done right, having a system like Anaplan or Pigment will help lead to increased revenues, quicker go-to-market, more profitable promotional activity, lower costs, and higher business valuations. Many companies looking at investment or IPO will find that having a proper system in place is a prerequisite.
Let’s take a brief look at each system.
Leveraging Anaplan.
Anaplan’s platform stands out for its versatility, scalability, and collaborative features.
It allows for the integration of various data sources, enabling a single, unified view of financial performance across an entire portfolio. This integrated approach facilitates better financial planning, budgeting, and forecasting, which are pivotal in the PE industry.
Its sophisticated financial planning and analysis capabilities, coupled with its collaborative and technological features, make it an excellent tool for managing the complex financial requirements of the PE industry.
As PE firms grapple with increasing competition, rising valuations, and the need to add tangible value to their portfolio companies, tools like Anaplan can be game-changers, offering the depth of insight and agility required to succeed.
Anaplan has been proven at over 1,700+ clients around the world.
Some of the worlds leading companies have trusted Anaplan for their planning needs and are adding value with it’s fantastic toolset.
Key Overview
Pigment is shaping the future.
What sets Pigment apart is its flexibility, interactivity, and powerful analytics capabilities. It not only allows for the integration of data from disparate sources but also offers a highly visual and intuitive interface, making complex financial data more digestible and easier to manipulate.
Its user-friendly interface makes it an excellent tool for managing the complex financial dynamics of the PE industry. With Pigment, PE firms can not only make better investment decisions but also manage their portfolio of companies more effectively and plan optimal exit strategies, thereby enhancing their potential for success.
Pigment is rapidly growing with over 100+ clients around the world.
As a platform Pigment is rapidly evolving and they’re investing a lot of time and money into expanding functionality.
Key Overview
About Bolt Consulting
Bolt Consulting is a financial systems specialist that can help whether you need to implement general ledger systems, ERP such as SAP or Oracle, or EPM planning software like Anaplan or Pigment.
We’re run by ex-Big4 qualified accountants with the highest certifications available within each system, meaning we won’t let you down.
We can help.
Both platforms come as a shell out of the box, but Bolt Consulting has a library of accelerators that help speed up implementation, reduce implementation costs, and get these systems up and running quicker than most.
Ready to discuss how we can help you?
If it sounds like we can help you it’s time to have a chat. Get in touch with us via one of the methods below.
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