Embracing Connected Planning for Private Capital

Occasional Contributor

The private capital industry has experienced huge growth over the past decade, with unprecedented investor capital flowing into private equity and debt, real estate, infrastructure and other alternative investment strategies. Success has brought new challenges, such as how to keep up with the volume, variety, and velocity of investment and portfolio data, and how to derive competitive insights and advantages from such information. Coupled with an influx of data, investors, and regulators are also demanding greater transparency. It is therefore no surprise that CFOs, CTOs, and COOs have their hands full in building a scalable operating model to support their fund-raising and investment activities. In a 2017 WBR InvestOps survey, 62% of the 100 North American buy-side firms questioned named alternatives and private debt as the most challenging and costly asset classes to support, and some 75% named consolidating systems and reducing interfaces as the key strategic priority for 2018.

Digital disruption: The time to innovate

Private capital has, in the past, been quite slow to adapt to changes and introduce or embrace new technologies. At first that might seem surprising, since many private investment firms are small (in terms of people) and are generally receptive to new ideas, so they seem like prime candidates for embracing new technology. The issue is with the software solutions that have historically served the financial services industry; they tend to focus on one or two core functions, and therefore are weak—or provide no solution at all—in other important areas. Not only that, but most are especially weak when it comes to forward-looking planning, modelling, and analytics. Consequently, a significant investment in a technology solution can still fall short of expectations, and it fails to connect every part of the business. Additionally, the belief that one software solution can support all functions within a private capital business is flawed and unrealistic. A combination of technology solutions is required to really transform business operations at alternative investment firms.

Another key factor is integration between disparate solutions. Cloud technology is reducing the need for complex infrastructure and internally supported IT environments, enabling more efficient and effective reporting and analysis that is accessible and customizable by individuals within the business. Transparency is a significant factor on the minds of CFOs today as investors and regulators are demanding more granularity around fees and expenses, carry calculations and drivers of performance. Finally, mobility is prevalent in the minds of private capital firms, and full access to pertinent decision-making information while on the road is important for front office teams.

The good news is that private capital firms are now empowered by their executive teams and investors to change. Technology and digital innovation enables investment managers the power to connect data, workflow, and analytics like never before. Firms are starting to adapt and evolve their investment and operational infrastructure to gain and retain their competitive advantage.

Anaplan: Transforming Alternative Investments

Anaplan combines an unrivalled planning and modelling engine, predictive analytics, and cloud collaboration into one simple interface for business users. Across all lines of the private capital business, including finance, investor relations, portfolio management, operations, portfolio monitoring, executive committee planning, and HR. Anaplan connects financial, operating, and performance data with business strategy and processes.

Anaplan provides many of the same benefits of a traditional data warehouse, with the added benefit of being understandable to business users. It can serve as a tool for receiving information from multiple sources, internal and external (such as administrators and operating partners), to allow funds to model and evaluate cash flow data at the investment and investor level. Being cloud-based, Anaplan also fulfils private capital firms’ mobility requirements.

Finally, it’s extremely flexible. Once a firm solves a specific pain point using Anaplan, multiple other areas within the firm often find they can benefit from its use. Some of those include budgeting and cash flow forecasting, sale realization modelling, carry modelling, and compensation planning and approval.

Opportunities: Use Cases for Private Equity

For private equity firms, there are many potential use cases across their front, middle, and back office operations as well as at the portfolio company level.


  • Financial Planning and Analysis: Streamline management annual budgeting and planning processes; automate financial consolidations across legal entities; improve portfolio company planning and reporting as well as enable better profitability forecasting, cost allocations, balance sheet, and cash planning
  • Deal Underwriting, Valuations: Create granular acquisition underwriting and debt financing models with full data traceability and transparency; provide tailored investment valuations; access enhanced acquisition, LBO, M&A modelling, and sale realization planning tools
  • Operations and Cash Flow Forecasting: Roll-up cash flows from a portfolio company event or hypothetical liquidation to model out, in real-time, impacts on returns and distribution; optimize portfolio monitoring and forecasting capabilities as well as operations and project planning; streamline and automate complex management company cash-flow forecasting
  • Waterfall, Promote Modelling: Automate complex carry structures with multi-tier waterfalls; better analyse funds, portfolio, and investment performance; consolidate through multiple legal entity structures
  • Investor Relations: Integrate performance reporting and analytics with enhanced fundraising, deal flow forecasting capabilities, and investor territory stratification
  • Human Capital Planning: Models with workflow engine to initiate approvals as well as costs by region, line of business, and grade; visualize organisation modelling; provide incentive compensation modelling and forecasting, workforce planning, and analytics

Opportunities: Use Cases for Real Estate

For real estate assets and investment managers, there are also many potential use cases across their front and back office operations as well as at the underlying property asset level:


  • Deal Underwriting, Asset Management: Create granular property or portfolio acquisition underwriting and debt financing models with full data traceability and transparency; create lease-up and deal flow assumption sets; conduct advanced scenario modelling in real time to assess acquisition impact on returns and distributions
  • Enhanced Asset and Portfolio Monitoring: Workflow-based data aggregation and validation from disparate sources; configurable rules-based engine and financial validations (Trial Balance etc.); non-financial metric aggregation and analysis
  • Connected Property Budgeting, Forecasting and Long Term Planning: Fully integrated annual budgeting and planning processes; real-time variance analysis with full transparency; continuous rolling re-forecast with look-through for any time period; immediate impact analysis of changes from source systems; support for top-down driver based planning as well as bottom up or zero based methodologies
  • Development Feasibility: Create multiple development scenarios and model against the baseline BAU scenario; impact analysis of actual expenditure and lease-up over the life of the development; break out incremental NOI value of development by line item versus market forces impact on static state asset performance
  • Operations Planning: Enhanced CapEx, OpEx, and service charge planning and allocations; real-time reporting on variances with drill-through and narratives; rolling multi-year CapEx planning; integrated Project Portfolio Management capabilities
  • Property Portfolio Planning: Create ad hoc portfolios by asset type, geography, strategic, etc.; stress txt based on top line driver changes across an entire portfolio in seconds (changes in LIBOR, yields, sub-market MLAs, incentives or other factors); conduct M&A impact analysis with multiple side-by-side scenarios
  • Property Valuation: Calculate accurate capital valuations; predict portfolio profitability by forecasting revaluations based on future cashflow; tailored valuation methodologies based on local standards (DCF in US; equivalent yield in UK etc.)
  • Fund, Waterfall and Enterprise Modelling: Integrated modelling from lease and property through investment structures to ultimate fund or holding entity level; support for complex waterfalls at different tiers of the investment structure; top-down driver based impact analysis; track carried interest for participants
  • Investor Relations: Integrate performance reporting and analytics with enhanced fundraising and deal flow forecasting capabilities and investor territory stratification

The power of Connected Planning

The above use cases highlight some of the capabilities of Anaplan to solve for many of the situations where the private capital industry has previously reverted to disparate Excel spreadsheets to provide the flexibility and control that firm professionals require.

Due to the truly connected planning nature of Anaplan it naturally grows within the organization, such that once a firm has used Anaplan to solve one particular issue (e.g. human capital planning), they then go in search of other processes and models to improve, connect, and automate (e.g. carry models, distribution waterfall calculations, financial entity consolidations) as well as new data streams to connect (e.g. accounting system data, benchmark data etc.). Several common scenarios faced by the private capital industry have been built into Anaplan Accelerator Apps which can be found on the Anaplan App Hub. These Apps provide accelerator models for Anaplan clients, enabling them to leverage a pre-built model and customise the requirements to their own processes, workflows, reporting requirements, and data integration needs.

The most advanced users are those that then connect their different models within Anaplan. This enables firms to connect a full investment to investor value chain e.g. an LBO model to value a deal, connect a portfolio company monitoring model to track and value their investment, connect a carry / waterfall model to aggregate the returns up through their fund structure and finally connect returns back to their employee incentive compensation scheme models.

In summary, one of the most powerful aspects of leveraging Anaplan within a private capital operating model is the ability to streamline, evolve, adapt, and automate many of the historically disparate models used to operate a private capital business. As goals change, markets shift, and strategies adjust –so does your Anaplan solution. It’s a living platform that adapts to your requirements and transforms the way you do business.

About the authors


Nick Moore is co-founder and executive director of Lionpoint Group. 


Jonathan Balkin is co-founder and executive director of Lionpoint Group. 

For more information on Lionpoint Group and how we support private capital firms in their Anaplan please visit www.lionpointgroup.com or email Anaplan@lionpointgroup.com.

1 Comment
New Contributor

 This is excellent.