3 Major Challenges Facing Private Equity Operations

January 4, 2023



The world of private markets is often seen as the domain of the high net worth individuals, corporate giants, and institutional investors. As such, it can be a complex arena for companies to navigate. You face many challenges when operating in this space, from understanding complex legal documents to finding & retaining top talent. In this article, we will explore three major issues regarding private markets operations: interpretation of Limited Partnership Agreements (LPAs), reliance on Excel spreadsheets for data manipulation, and difficulties in retaining key personnel.  

Interpretation of LPAs

One of the most important documents when entering a private equity deal is the Limited Partnership Agreement (LPA). This agreement outlines the rules and regulations that govern the relationship between an investor and a company. It also states how returns should be calculated and distributed upon fund liquidation. Unfortunately, there can be discrepancies in how different parties interpret these agreements which can lead to disputes, for example over compensation or flows at the end of a fund's life cycle. Companies must make sure they understand each clause in their LPAs before signing on or risk having costly disagreements down the line.  

Reliance on Excel Spreadsheets

Excel spreadsheets have long been used by companies as a tool for data analysis and manipulation. However, their usage has decreased over recent years due to increased competition from more modern applications such as qashqade, which offer better features and capabilities. We all know how frustrating it is when there is an unresolved mistake in an Excel sheet.  Companies need to stay ahead of the curve if they want to remain competitive during their operations within private markets - investing in more advanced technology will enable them to make more informed decisions while improving efficiency at the same time.  

Difficulties Retaining Top Talent  

Private markets are very competitive environments where key personnel tend to move around frequently, tempted by better opportunities or higher paychecks. This can create significant problems for companies when it comes to retaining talented staff members since there is always someone else willing to offer them a role.  Frequent staff changes during the fund’s life cycle can lead to manipulation or misinterpretation of LPAs by various players which can result in financial losses or legal disputes down the line. Companies must invest in benefits packages and incentives such as stock options if they want to stop their best employees from leaving.  

These issues - the interpretation of LPAs, reliance on Excel spreadsheets for data manipulation, and difficulty in attracting and retaining top talent - are critical considerations for private market operations. Investing in modern technology and staying up-to-date with ever-changing regulations is no longer a suggestion, but an obligation if companies wish to remain competitive while avoiding costly disputes. To stay successful in this area, integrating new technologies is a necessity.

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