January 7, 2019
The needs of limited partners (or LPs) are evolving. Today’s LPs want to be better informed investors and make active investment decisions. LPs want more transparency from general partners . They want more information around fees and carry for their investments. Lastly, LPs want more granularity in order to drill down into how their money is being invested across companies in a fund.
The easiest way to gain this insight is to understand the cash flows that a general partner is reporting. Cash flows, at their simplest, are categorized as a capital call or distribution. It’s determining what underlying activities go into these categories that can be problematic. Additionally, since cash flows are the backbone of any performance metric within the private markets, LPs want to ensure that the proper values are included in these calculations.
To better understand the potential variation in cash flow types, we’ve put together a white paper. This white paper highlights some of the most common categorization of capital calls and distributions. Also, it looks at how these cash flow categorizations feed into certain calculations. Lastly, we highlight how LPs are using technology solutions to simplify this process.