6 Tips for Improving Portfolio Performance

Within private equity firms, there are lots of nuances to your business decisions. But the primary goal is simple and straightforward: build a portfolio that allows you to buy low and sell high.

That’s easier said than done, but fortunately there are numerous automation tools and data management techniques that can drastically improve portfolio performance, all while leveling off headcount and increasing overall organizational efficiency.

At Saxony Partners, we work with private equity clients to reduce spending and increase profits from investment portfolios using digital solutions. Here are our top six tips for improving portfolio performance.

Tips for Improving Portfolio Performance

1. Start out with clear objectives.

There are plenty of tactics for improving your internal businesses processes that can make an impact on your overall portfolio performance. But trying to tackle everything at once can lead to disorganization or unnecessary technology spending. Completing a thorough review of your practices and auditing technology for its usefulness at the beginning of your efforts will help you prioritize the areas of your business that need the most improvement.  

When we work with private equity firms at Saxony Partners, our team begins the process with a discovery phase. First, we interview key employees and relevant business stakeholders. Then we identify the major organizational pain points. Finally, we develop a clear picture of investment management strategy so that we can make recommendations for improvement.

2. Minimize existing costs.

From fees to brokerage commissions to headcount growth, mounting business costs can detract from your portfolio performance. Every dollar you have to spend to run your business is a dollar that can’t compound for you.

Find ways to reduce costs early in your investment timeline, and within your organization. This can mean identifying and eliminating underutilized technolo, tracking expense ratios, or taking opportunites to maintain minimal headcount.

3. Aggregate data into a single source of truth.

When all of your crucial asset data is siloed into disparate Excel spreadsheets across your organization, it’s difficult to put that data to good use and make smart business moves. It makes investor reporting a huge chore, and it doesn’t allow you to have real-time access that can help you avoid risks and spot new opportunities earlier.

Consolidating your data into a single source of truth empowers you to utilize it to its full capacity. You can easily access the information you need from an organized central location and use it to start improving portfolio performance.

Our data architects at Saxony Partners have deep industry knowledge and are experienced with the complicated, nuanced structures that characterize investment data. This team of digital experts has built data management systems specifically for private equity clients and allowed them to scale their revenue growth, doubling profits once technology limitations were out of the way.

4. Improve data integrity.

Human error is inevitable when you’re storing your data in spreadsheets, where it can be entered incorrectly, formatted differently, or contextualized incompletely. And bad data means bad decisions, plus embarrassing reporting mistakes.

As you integrate your data into a single source of truth, you can use automation tools to identify and eliminate errors like incomplete data sets, duplicates, and outliers caused by typos.

5. Increase reporting efficiency.

Old school reporting processes are a drain on time and resources that hold back your business potential.

One of the biggest benefits to having all of your data in one place as the foundation for your strategy for improving portfolio performance is that you can start automating the reporting process.

Our team has helped private equity firms build a BI roadmap that allows them to conduct accurate, credible quarterly reporting in a timely manner, while eliminating manual steps from the reporting process.

6. Leverage real-time data to project outcomes.

With access to a pricing database with real-time data updates, your organization can make decisions about how to manage assets based on current information instead of only using outdated reports. This is a game-changer for profitability.

Real-time data access not only offers greater opportunity to make money, it also curtails risk. Market fluctuations based on global events or internal malfunctions can happen in the blink of an eye, and without immediate access to that information you can make some very poor business decisions.

Saxony Partners Private Equity Solutions

These tips for improving portfolio performance boil down to one key concept: faster access to reliable data. If your firm could benefit from data management solutions, contact our team at Saxony Partners.