Lessons Learned - GP Implementation of the ILPA Template
Lessons Learned: GP
Implementations of the ILPA
A candid Q&A with the PFA Solutions Co-Founder Richard Change
about his first-hand experience implementing the ILPA Template for
GPs with a few surprising hurdles and outcomes.
Adopting the ILPA Template,
how hard is it, really?
Richard, thank you for taking the time share your
expertise and what has become your front row
seat to this evolution in private equity reporting.
First things first: I think LPs and GPs all want to
better understand the task, how hard is it really
for a GP to implement the Template?
Great question and it’s one we are asked
continuously. We’ve spent the last 18
months helping numerous GPs implement and
automate the ILPA Reporting Template. At first
glance the template is a bit daunting but most realize
that the bulk of the data fields consist of metrics that
they are already reporting on in their quarterly
reporting. This is true for the vast number of fields in
the template, however we typically caution clients to
scroll down and look closer at the items “below the
fold”. The template contains over 650 fields that need
to be systematically mapped and extracted from
source accounting systems. A good number of GPs
rely upon two accounting systems, one for their
limited partners and another for their internal
management company. The template requires data
from both systems in most scenarios because GPs
typically maintain travel and expenses in their
internal accounting system with charge backs to the
fund in their limited partner or ‘fund accounting
system’. Mapping these items over with the required
specificity in the template takes planning and in some
cases new accounting practices and/or data
What is the biggest hurdle to
making it a push-button
In your experience preparing GP systems to
auto-populate the ILPA Template, what would
you say is the primary hurdle you see for all GPs?
The biggest hurdle we see is providing a
reporting solution that works across multiple
vintages of a GP's funds. Legacy funds may
have used different accounting strategies for
booking fees and expenses or different fund
strategies may have utilized different approaches all
together. Most of our effort is working to
understand where these differences lie and helping
devise accounting and reporting solutions that work
for all possible scenarios.
What are GPs saying about
the ILPA Template?
What is the GP feedback behind the scenes?
I would assume that at first, they are more
reluctant so I’m curious if their perspective
changes once they are able to make it a
regular part of their quarterly LP statement.
You're correct in that some GPs are at first
reluctant because there is a concern for
how the information could be used in a negative
manner which is understandable. However, I
would say that overwhelmingly, GPs need a
single standard that eliminates the many bespoke
templates that they are currently having to prepare.
The broad industry support for the ILPA Template
provides this much needed relief with regard to
investment cost and carry reporting. And, once
implemented, the information provided to their
investors via the ILPA Template fosters an open GP-
LP conversation about investment costs and
carried interest allocations which is far more
constructive when they can be discussed in
the context of returns.
If you could offer advice to
all GPs what would it be?
What’s the one thing that all GPs need to know
about (implementing) the ILPA Template?
Look at the entire template first and then
make an assessment as to which funds
you’re able to systematically provide data for.
Start by producing a trial balance that maps to
the various fields and assessing where you may
have gaps in your accounting and work to solve for
those gaps prior to automating. Get legal involved
early to assure that the information you’re reporting
is consistent with your existing reporting materials
and compliant with your investors' LPA.
Furthermore, having legal involved from the start
can also help with any footnotes that may need to
accompany the template in the last section.
Independent consultant, speaker,
author, and advisor
to PFA Solutions, Lorelei was
formerly a reporting officer for the
SC Retirement System Investment
Commission where she spearheaded the
development and implementation of the annual fee
collection, validation, and reporting process which
was featured in a notable 2015 CEM Benchmarking
study1. Ms. Graye has travelled extensively to
educate and promote best practices such as the ILPA
Template. With two decades of business experience,
Lorelei holds a B.S. in finance and a B.A. in
accounting summa cum laude.
1 Dang, Andrea CFA; Dupont, David CFA; and Mike Heale. “The Time
Has Come for Standardized Total Cost Disclosure for Private Equity."
PFA Solutions co-founder and
serves on the Board of the
AltExchange Alliance and various
industry committees. Prior to PFA Solutions,
Richard was the Chief Architect at The Carlyle
Group where he successfully implemented strategies
that transformed and evolved mission critical
systems while reducing overall spend and the
total number of development resources. Richard
holds a B.S. in Electrical Engineering from the
Catholic University of America and a M.S. in
Management of Information Technology from the
University of Virginia, McIntire School of Commerce.
About Us PFA Solutions
With over 20 years of Private Equity and Financial Services industry experience, PFA Solutions
brings technical expertise and deep business acumen to every problem we solve.
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