Death of Traditional Financial Reporting: Are We Entering a New Era of Private Equity?
5 min

Death of Traditional Financial Reporting: Are We Entering a New Era of Private Equity?

Financial Reporting
Jul 30, 2021
5 min

US private equity firms are sitting on over $150 billion in unused capital

This was the latest estimate by PwC Deal Sector Leader John Potter. In other words, we’re sitting on a whole lot of dry powder, just waiting for the right opportunities to invest as they arise.

These significant levels of dry powder in private markets drive transaction multiples upwards and lead private equity to reshape their roles from traditional buy-low-sell-high firms into true operators and stewards of value creation.

It’s a new era of low-interest rates, excess private capital, and heavy competition. And a premium is now being placed on a fund’s ability to quickly and efficiently highlight opportunities for improvement and investment.

Gone are the days of the old 3-statement format

Financial reporting, in its historical three-statement, once-a-period format, is no longer enough. Today’s financial investors are demanding real-time information and insights. Easier said than done, right?

Naturally, most small and midsized enterprises are scrambling to meet these demands. Resource scarcity and the costs associated with standing up a modern data analytics infrastructure are pressuring funds to find a better, repeatable way to push visual financial reporting into their portfolios.

All of this pressure has pushed businesses into spending billions of dollars annually on ERPs, accounting tools, CRMs, and more. And yet, over half of all of this data continues to go unused.

Traditional financial reporting isn’t cutting it when it comes to reporting out what matters.

Your team needs all of this hard-earned, costly data to go to good use if they’re going to move the needle in their areas of business focus. However, if you’re not a CPA, most of these financial statements are opaque. Ever notice eyes glazing over when you’re presenting what you deem to be ground-breaking insights and analysis? It’s not you, it’s the unintuitive format. And users at all levels are demanding more.

Consider the following for your business:

  • What are the trends that matter most?
  • Where should we be focused?
  • What should we do more of?
  • What should we stop doing?

Can you answer these right now with confidence? These are the questions keeping many up at night, thanks to outdated, compliance-centric financial reporting.

In an industry well-versed in growth via strategic acquisition on pre-defined exit timelines, the ability to integrate and analyze, acting on financial information coming from disparate sources has never been more challenged.

Historically, orchestrating real-time financial reporting at a sophisticated level meant getting in early and beginning an often years’-long implementation of a common enterprise resource planning system across the portfolio. Alas, expanding costs and complexity often led to futility.

Where do we go from here?

If we want to take advantage of modern data and be able to strike on investments while the iron’s hot, it’s time we remove misalignment from our vocabulary. We need to get the entire executive suite on the same page.

In essence, you need to finally pull that dusty data off the shelf and into a true real-time platform that makes the story crystal clear with visual representation and prevents eyes from glazing over. As attention spans shorten and grasping current snapshots of business performance becomes core to modern professionals in the financial space, it’s critical that we as executives step up our game.

Screenshot of OverlayAnalytics enhanced financial reporting platform

Josh Beaver

Josh Beaver is the Chief Operating Officer for OverlayAnalytics, focusing on product design and delivery.

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