Private Equity Firms & Portfolio Company Communications

This becomes a bigger problem when a private equity firm decides it’s time to spin off the asset and start an M&A process, as it can become painstaking to gather information together in one place.


17 November 2009

As a senior account executive at Intralinks, I often have insight into portfolio company communications from speaking with private equity clients and prospects. It turns out that exchanging information with their portfolio companies is not managed with a firm process in place. The portfolio company usually emails important documents back and forth or sends them via snail mail.

According to one client I’ve spoken with, information that often is shared between the portfolio company and its private equity parent includes flash reports, materials related to a board meeting that quarter, and information related to add-on acquisitions that may be taking place. Another client told me their portfolio companies report in on big orders, highlights on operational and financial successes along with a metrics page that is unique to each portfolio company.

Once this important and often confidential information arrives at the parent (private equity) firm, they are stored in email inboxes, on computers — or if they are really good — on a shared network drive that is backed up. Either way, this unfortunately makes for a hodgepodge of unorganized information.

This becomes a bigger problem when a private equity firm decides it’s time to spin off the asset and start an M&A process, as it can become painstaking to gather information together in one place. Having these materials together and organized quickly is crucial because potential buyers need to review the information in a timely and logical manner and then put together an offer for the seller. Using a virtual dataroom is one way that professionals are preparing for the due diligence process to keep information aggregated in one location and available to easily search, organize, and securely share if necessary.

Whatever the communication consists of, the notion of one central repository for portfolio company communications is resonating with private equity folks. This way, when an exit strategy is being planned, less work needs to be done in accumulating documents. And less hassle means a significant time and money savings in the end.