3 Critical Manual Processes Undermining PE Portfolio Performance (and How to Automate Them)

Private equity (PE) firms are facing challenging headwinds. With record amounts of dry powder sitting idle and increasingly difficult exit environments, the industry is under pressure to deliver results.

• Recent analysis from PwC (based on data from alternative investment data provider Preqin) shows that 28% of limited partners note investment performance has fallen below expectations.
• Executives share similar concerns, with 70% reporting in the October 2024 PwC Pulse survey that uncertain macroeconomic conditions present either moderate or serious risk to their business operations.

In response, forward-thinking PE firms are reimagining traditional business processes and diversifying their investment opportunities to better distribute risk. However, a more varied product mix will always add complexity, making it even harder to manage a diverse portfolio with traditional methods.

This moment presents the perfect opportunity to boost portfolio efficiency by replacing manual processes with smarter, technology-driven solutions, starting with three critical areas outlined below.

Key Takeaways

• Manual processes are holding PE firms back: As economic pressures rise, firms need more efficient, streamlined operations.
• Deal tracking needs modern tech: Centralized CRM systems like HubSpot improve visibility, prevent missed opportunities, and preserve institutional knowledge.
• Back-office automation is key: Automating financial planning, investor relations, and compliance frees teams to focus on strategic growth.
• Hypha delivers tailored PE solutions: Specialized HubSpot services provide customized CRM implementation, investor relations automation, and portfolio company dashboards to enhance efficiency.
  
  

1. Deal Tracking & Pipeline Management

The Challenge

Many PE firms continue to track deal flow using manual spreadsheets. This approach creates significant inefficiencies, including:

• Inconsistent data entry and information silos
• Missed follow-up opportunities to time-sensitive opportunities
• Limited visibility into relationship history
• Ad-hoc prioritization of high-potential deals

When deal teams rely on manual tracking, valuable insights get lost between team members, institutional knowledge walks out the door with departures, and opportunities fall through the cracks.

How to Fix It

Implementing a centralized Customer Relationship Management (CRM) system such as HubSpot transforms deal sourcing and pipeline management through:

• Centralized Deal Tracking: All interactions with prospects are automatically logged in one accessible system, creating a complete relationship history visible to the entire team.
• AI-Powered Lead Scoring: Sophisticated algorithms help prioritize high-value deals based on fit criteria and engagement signals, ensuring the most promising opportunities receive appropriate attention.
• Automated Follow-Up Sequences: Intelligent reminders and email integration keep deal teams on track with timely, consistent communication, significantly improving conversion rates.

By shifting from spreadsheets to an automated CRM approach, PE firms can identify more qualified opportunities, respond faster to promising deals, and build stronger relationships with potential acquisition targets.

2. Manual Back-Office Operations

The Challenge

PE firms operate with traditionally lean teams, which means manual back-office operations present significant challenges一even under optimal conditions. These inefficiencies become even more pronounced as firms diversify their investment strategies across multiple asset classes, dramatically increasing operational complexity. Teams already stretched thin now face mounting pressure across multiple functions:

• Financial planning and analysis (FP&A)
• Investor relations and LP reporting
• Payroll and human resources
• Compliance and regulatory reporting

Manual handling of these critical functions not only consumes valuable time but also increases error rates and compliance risk.

How to Fix It

Streamlining back-office operations requires investment in integrated technology solutions:

• Enterprise Resource Planning (ERP) & Financial Management Software: Centralize financial planning, payroll, portfolio reporting, and compliance functions, automating workflows and reducing manual data entry.
• CRM & Investor Relations Platforms: Streamline investor communications, track fundraising activities, and automate LP reporting, ensuring consistent, accurate information delivery. HubSpot’s flexible platform and customizable features can effectively address these challenges, offering an intuitive user interface and efficient implementation processes.
• Cloud Computing & Cybersecurity Infrastructure: Secure cloud-based solutions provide accessibility while maintaining stringent security standards, enabling safe collaboration across teams and portfolio companies.

By integrating these technologies, PE firms can redirect valuable human capital from administrative tasks to higher-value strategic initiatives that drive portfolio growth.

3. Performance Tracking & Analysis

The Challenge

Many PE firms still rely on manual performance tracking processes that involve:

• Time-consuming data collection from disparate sources
• Labor-intensive spreadsheet analysis
• Inconsistent reporting methodologies
• Delays in identifying performance issues
• Limited ability to implement timely interventions

This approach leads to delayed decision-making and missed opportunities for value creation. The complexity of data feeds and reporting demands strained resources precisely when timely insights are most needed.

How to Fix It

Implementing robust performance tracking systems addresses these challenges through:

• Integrated Reporting with Quality Assurance: Advanced reporting technology with built-in data validation streamlines aggregation, ensures accuracy, and generates comprehensive reports that meet regulatory requirements.
• Oversight Management Tools: Surveillance technologies enable managers to review and analyze data across large sets of accounts, identifying investment trends and outliers within defined client universes.
• Comprehensive Analytics Solutions: AI and machine learning capabilities overcome data management complexities, streamline reporting workflows, and extract actionable insights that drive performance improvement.

With automated performance tracking, PE firms gain real-time visibility into portfolio performance, enabling faster interventions and more strategic resource allocation.

The Path Forward

As PE firms navigate an increasingly complex landscape, automation of these three critical areas can provide a significant competitive advantage. By implementing integrated technology solutions, firms can:

• Identify and close more promising deals
• Reduce administrative burden and operational costs
• Gain faster insights into portfolio performance
• Make more strategic, data-driven decisions
• Increase overall returns to meet LP expectations

The firms that thrive in today’s challenging environment will embrace the right technologies to eliminate manual processes and focus their talent on high-value activities that drive growth.

How Hypha Delivers PE-Specific Automation Solutions

As a specialized HubSpot Partner Agency with a comprehensive understanding of private equity operations, Hypha provides tailored solutions that address the unique challenges facing PE firms. Our team understands both the technical aspects of HubSpot implementation and the strategic considerations of portfolio management.

Hypha leverages HubSpot’s powerful platform to create customized solutions for private equity firms:

• Deal Flow Management Systems: Custom pipelines and properties designed for PE deal tracking, from initial sourcing through due diligence and closing.
• Investor Relations Automation: Streamlined LP communications, capital call management, and reporting workflows that maintain compliance while reducing administrative burden.
• Portfolio Company Dashboards: Unified visibility across investments with custom reporting frameworks that highlight KPIs and performance metrics most relevant to PE operations.
• Cross-Portfolio Insights: Comparative reporting that identifies trends, opportunities, and risks across your investment portfolio.

Fractional CMO & Implementation Support

Beyond technology implementation, Hypha provides ongoing strategic support:

• PE-Experienced Leadership: Our team brings direct experience working with investment firms, understanding the industry’s unique workflows.
• Value Creation Planning: Strategic guidance on implementing digital transformation initiatives that drive measurable performance improvements across portfolio companies.
• Training & Enablement: Comprehensive onboarding for deal teams, back-office staff, and portfolio company management to ensure maximum adoption and ROI.

Related: Why PE Firms Are Turning to HubSpot & Fractional CMO Partnerships

By partnering with Hypha, PE firms gain both the technological infrastructure and strategic guidance needed to transform manual processes into streamlined, automated workflows that drive efficiency and growth.

Contact us to explore more about how our services can help your firm eliminate inefficiencies, position portfolio companies for growth, and maximize your portfolio performance today.