Infonovum in conjunction with their client has developed software to administer Private Equity based plans.
Prior to the development of this software, the client was managing these plans in custom spreadsheets which had huge limitations. Some of these limitations are
• Inability to scale easily
• Lack of audit trail and traceability
• Lack of systematic versioning and historicization of data
• Dependence on manual intervention
Not only did the software overcome these challenges but also added several salient features that made the administration of Private Equity plans more efficient. The following are some of the important features in the administration of Private Equity plans, Carried Interest plans and Co-invest plans
Administration of PRIVATE EQUITY plans in general
• Ability to define generic thresholds for profit sharing between investors and investment.
• Processing waterfalls to calculate carried interest amounts.
Administration of CARRIED INTEREST Plans
• Mapping of complex company structures and transaction flows through these structures in proper defined ratios.
• Accounting of individual carried interest plan participant
• Maintenance of expenses and waterfall of expenses
• Adjustment of payments based on different tax status of investments and carried interest
Administration of CO-INVEST plans
• Administration of various models of co-invest plans
• Dealing with Loans and loan defaulting for funds going underwater
• Calculating and recording expenses like fees, loans, loan interest and the like
• Customizable Waterfall based models for payments of the expenses from realizations
All the above features were developed using a very robust accounting model based on the following best accounting practices:
• Maintaining double entry bookkeeping based transactions
• Logging transactions at atomic level
• Maintaining audit trails