(May 2, 2012) — Private equity firms have finally woken up to their investors’ calls for transparency on their process and management, research this week has revealed.
Some 92% of general party respondents to the biennial review of the private equity industry by EisnerAmper said ‘transparency’ was one of the top concerns held by their investors.
This number was only beaten by 96% who said a fund manager’s ability to execute their strategy was one of the top concerns.
The report – The Pulse of Private Equity – confirms a trend where managers view limited partners (LP) as having an ever-increasing concern about due diligence, fund terms, management fees, and fair value. For the first time the survey asked about LPs’ interest in both transparency and fund management’s ability to execute. That these questions were inserted at all is a telling sign of the times.
The report stated: “LPs continue to increase their watch on private equity investments and the fund managers. They will continue to demand more on all fronts. Transparency in all aspects of the fund’s operations is essential. With the looming SEC registration of private capital providers, compliance may play a larger role in this move toward transparency.”
More generally the survey showed the industry was upbeat about the fundraising environment in 2012 and predicted more activity from managers gathering assets.
Fundraising has been on a downwards slope since before the financial crisis in 2007, which marked the boom years of private equity.
Some 53% of respondents said they were spending ‘moderate to high’ amounts of time fundraising – this is a highest number by quite a margin for some time. In 2009, only 26% agreed with this statement. In the last half of 2011, 44% agreed with the statement.
The reports said: “We can predict increased levels of fund raising, in a somewhat more competitive environment, for the foreseeable future.”