Private equity waterfalls at BNY Mellon
24 September 2013 Boston
Image: Shutterstock
BNY Mellon has created an enhanced distribution 'waterfall' capability as part of its private equity fund services.
Distribution waterfalls in a private equity fund establish how proceeds from realised investments will be divided between investors and the fund manager. It's also through the distribution waterfall that fund managers and principals receive their performance and incentive fees, or 'carried interest.'
“Waterfall calculations, which are governed by the language found in Limited Partnership Agreements, are one of the most complex aspects of servicing private equity funds,” said a BNY Mellon statement.
“Today, most private equity firms and fund administrators rely on labour-intensive manual methods to calculate and report distribution proceeds.”
"This major new offering marks the beginning of the end of spreadsheet calculations for private equity funds," said Alan Flanagan, global head of product management for alternative investment services at BNY Mellon.
"Our automated and integrated waterfall solution brings the benefits of a more efficient, controlled environment, and that means improved risk management and more transparent reporting for investors and fund managers alike."
The enhanced capability captures the algorithms and parameters used to calculate a private equity fund's distributions. The service is incorporated with BNY Mellon's private equity accounting platform, which assists with distribution processing and hypothetical liquidation modeling. BNY Mellon clients who opt for the service will also receive more detailed reporting with the new waterfall capability.
Distribution waterfalls in a private equity fund establish how proceeds from realised investments will be divided between investors and the fund manager. It's also through the distribution waterfall that fund managers and principals receive their performance and incentive fees, or 'carried interest.'
“Waterfall calculations, which are governed by the language found in Limited Partnership Agreements, are one of the most complex aspects of servicing private equity funds,” said a BNY Mellon statement.
“Today, most private equity firms and fund administrators rely on labour-intensive manual methods to calculate and report distribution proceeds.”
"This major new offering marks the beginning of the end of spreadsheet calculations for private equity funds," said Alan Flanagan, global head of product management for alternative investment services at BNY Mellon.
"Our automated and integrated waterfall solution brings the benefits of a more efficient, controlled environment, and that means improved risk management and more transparent reporting for investors and fund managers alike."
The enhanced capability captures the algorithms and parameters used to calculate a private equity fund's distributions. The service is incorporated with BNY Mellon's private equity accounting platform, which assists with distribution processing and hypothetical liquidation modeling. BNY Mellon clients who opt for the service will also receive more detailed reporting with the new waterfall capability.
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