Case Study: Outsourcing to Streamline IRR Calculations for Fundraising Success

Company: A large private equity and private credit manager with over $20 Billion in AUM
Location: Global
Financial Services Sector: Private markets

Background

A global private equity and private credit fund manager with over $20 billion in AUM was preparing to launch its latest vintage fund, Fund VI. The manager needed fundraising materials to comply with FINRA Regulatory Notice 20-21 (RN 20-21), which requires IRRs and associated metrics to align with Global Investment Performance Standards (GIPS^®), to leverage financial intermediaries for additional commitments.

ACA’s investment performance team collaborated with a global private equity and credit manager to calculate internal rates of return (IRRs), and associated multiples required for meeting bank platform standards during fundraising.

Challenge

The manager encountered substantial challenges preparing fundraising materials. Unfamiliar with the GIPS standards, and lacking GIPS compliance for the firm, they were unable to confirm that their IRR calculations and disclosures aligned with the required methodologies. Additionally, they were under pressure to meet a tight deadline for completing calculations and ensuring consistency with GIPS standards to satisfy the platform requirements.

With limited internal expertise and resources, the manager needed a solution that could handle the complexity of these tasks without overburdening their team.

Solution

The firm turned to ACA’s outsourced managed performance solution designed to address the manager’s challenges efficiently. The engagement began with a conversation to understand the nuances of the manager’s performance data and methodologies. We conducted a comprehensive gap analysis, reviewing the client’s data - including capital calls, distributions, net asset values (NAVs), fees, and credit facility transactions - to identify and resolve discrepancies with the GIPS standards provisions.

Using this data, we developed a customized performance template that calculated gross and net IRRs, both with and without the impact of the subscription line of credit, alongside additional metrics required by RN 20-21. The solution also included tailored policies and procedures documenting the underlying assumptions to ensure both client and regulatory compliance.

Results

We were able to efficiently deliver a comprehensive performance solution tailored to the manager’s needs. By calculating gross and net IRRs both with and without the impact of the subscription line of credit, along with additional metrics required by FINRA RN 20-21, we ensured full compliance with regulatory standards.

The custom performance template we provided not only streamlined the manager’s immediate fundraising efforts, but also improved their operational efficiency for ongoing performance reporting. Additionally, we produced appropriate disclosures and a detailed performance track record that met all platform requirements, allowing the manager to confidently access specific fundraising channels. This proactive approach enabled the manager to meet their 2025 fundraising goals well ahead of schedule.

Conclusion

By outsourcing these complex calculations to ACA, the firm was able to achieve compliance with speed and efficiency, alleviating the burden on their internal resources while ensuring alignment with regulatory and industry standards. Our expertise enabled the manager to access specific fundraising channels while enhancing its operational processes. This collaboration enabled the manager to meet its fundraising goals for 2025 well in advance, reinforcing ACA as a trusted partner for investment performance solutions.

How we help

Utilizing ACA's Managed Performance Services solutions allows firms to leverage unparalleled expertise, scalable solutions, and significant cost savings. In addition, collaborating with us can enhance service offerings, strengthen risk mitigation, simplify the intricate investment process, and seize opportunities for growth and innovation. 

Whether you are looking to launch, grow, or protect your firm, we provide comprehensive support across various regulatory frameworks such as FINRA and the SEC, as well as industry standards such a GIPS standards and ILPA, tailored to meet your firm's specific needs. Our services include:

• GIPS compliance and verification support: We can manage the entire GIPS compliance process, including composite management, account and composite level return calculations, outlier review, policy updates, GIPS report updates, and verification oversight, providing a complete solution for firms seeking full GIPS compliance management.
• Private fund reporting support: Our services extend to supporting private fund reporting and ILPA reporting, helping firms align performance metrics with investor expectations and industry best practices across private funds (including private equity, real estate, and credit) and liquid funds.
• Task-Based solutions: For firms with more specific needs, we offer targeted services, including:
  • Portfolio calculations, composite management, and reporting, seamlessly integrating with your existing systems to enhance operations
  • Building and maintaining customized investment track records, enabling you to showcase your firm's unique strengths and historical performance
  • Conducting thorough reviews and analyses of your fee calculation process to help ensure accuracy and identify areas for potential improvement
  • Assisting in generating performance data for marketing materials and responding to due diligence questionnaires
  • Analyzing and reporting key performance characteristics and risk metrics, helping you better understand and communicate your portfolio’s risk-return profile
  • Offering skilled professionals to augment your team or take on key tasks, allowing you to scale resources efficiently without compromising quality

If you would like to get in touch with our team today, we're ready to help. Start a conversation with us here. 

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