This is the presentation from the online roundtable organised by SteelBridge and Preqin Solutions in May 2017. In this session we covered recent trends for investor allocations and operational best practices for private capital firms.

1. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
Online Roundtable Discussion
Private Equity
Fundraising:
Operational
Excellence in the
Mid-Market
Organised by:

2. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
AGENDA
I. INTRODUCTIONS
II. PRIVATE CAPITAL TRENDS
III. OPERATIONAL EXCELLENCE
2

3. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
INTRODUCTIONS
James Haluszczak
Founder & Managing Partner
 Recognized industry-leading advisor
to Private Capital GPs and LPs
 Frequent industry speaker
 18 years of experience in Private
Capital operations, finance, portfolio
value creation, and technology roles
Todd Haring
Partner, Head of US Services
 Expert in system implementations,
data migration, strategic planning,
and data modeling & analysis
 Lead over 125 technology related
implementations
 18 Years of experience servicing
clients in Private Capital
Chris Ferguson
Chief Executive
 Head of Preqin’s software offerings
 Past experience in sustainable
investing and operations for lower
mid market growth/buyout fund
 CA (SA) through Ernst & Young
Andrew Kehl
Head of Business Development
 Manage global sales and client
development effort
 8 years experience in private fund
client services
 Chartered Alternative Investment
Analyst
3

4. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
Source: 2017 Preqin Global Alternatives Reports
PRIVATE CAPITAL TRENDS: Private Capital AUM at a record high - $4.5tn
4

5. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
PRIVATE CAPITAL TRENDS: Another good year for fundraising
0
100
200
300
400
500
600
700
800
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
AggregateCapitalRaised($bn)
Annual Aggregate Private Capital Raised by Asset Class, 2004 - 2016
Natural Resources
Infrastructure
Private Debt
Real Estate
Private Equity
Source: 2017 Preqin Global Alternatives Reports
5

6. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16
DryPowder($bn)
Private Capital Dry Powder over Time by Asset Class, 2005 - 2016
Natural Resources
Infrastructure
Real Estate
Private Debt
Private Equity
PRIVATE CAPITAL TRENDS: Now record levels of capital available to invest
Source: 2017 Preqin Global Alternatives Reports
6

7. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
PRIVATE CAPITAL TRENDS: Returns falling across Private Capital
-5%
0%
5%
10%
15%
20%
25%
30%
1 Year to
Jun-13
1 Year to
Dec-13
1 Year to
Jun-14
1 Year to
Dec-14
1 Year to
Jun-15
1 Year to
Dec-15
1 Year to
Jun-16
MedianAnnualizedReturn
Rolling One Year Private Capital Horizon IRRs
Real Estate
Buyout
Venture Capital
Mezzanine Private
Equity
Distressed Private
Equity
Source: 2017 Preqin Global Alternatives Reports
 Private Capital
returns not immune
to broader market
slowdown
 Buyout remains the
most resilient fund
type
7

8. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
Source: 2017 Preqin Global Alternatives Reports
PRIVATE CAPITAL TRENDS: Private Capital outperformed in the long term
 Longer term, Private Capital
has significantly exceeded
public markets
 Majority of investors
expectations remain at +400
basis points on public
markets
 Returns and diversification
attributes are the primary
drivers of allocations
8

9. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
PRIVATE CAPITAL TRENDS: Continued investor interest in Mid-Market Buyout
9
• Small to mid market buyout
clearly the stand out segment –
consistent with prior years
0% 10% 20% 30% 40% 50% 60% 70%
Other
Secondaries
Fund of Funds
Growth
Large to Mega Buyout
Venture Capital
Small to Mid-Market Buyout
Proportion of Respondents
Fund Types* that Investors View as Presenting the Best Opportunities
Source: Preqin Investor Outlook Jan 2017

10. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
PRIVATE CAPITAL TRENDS: Mid-Market Buyout net distributions by region
Source: Preqin Performance Analyst Database
10

11. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
0% 20% 40% 60% 80% 100%
Infrastructure
Real Estate
Hedge Funds
Private Equity
Fundraising Climate Today vs. 12 Months Ago
More Challenging No Change Less Challenging
926
322 343
238
355
90
137
39
North America Europe Asia Rest of the World
Private equity funds in market by primary
geographic focus (as at January 17)
Nº of Funds Raising Aggregated Capital Targeted ($bn)
PRIVATE CAPITAL TRENDS: Fundraising is more competitive than ever
Source: 2017 Preqin Global Alternatives Reports
11

12. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
Private Equity Private Debt Real Estate Infrastructure Natural Resources
Valuations Valuations Valuations Valuations
Ongoing
Volatility/Uncertainty
in Global Markets
Exit Environment Fundraising
Ongoing
Volatility/Uncertainty
in Global Markets
Deal Flow Fundraising
Ongoing
Volatility/Uncertainty
in Global Markets
Deal Flow Fundraising
Ongoing
Volatility/Uncertainty
in Global Markets
Public Perception of
Industry
PRIVATE CAPITAL TRENDS: Key challenges for Private Capital fund managers in 2017
Source: 2017 Preqin Global Alternatives Reports
12

13. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
PRIVATE CAPITAL TRENDS: Operational Excellence is a key challenge for private capital investors in 2017
Source: Preqin Investor Survey, Due Diligence and Portfolio Monitoring Process – April 2016
13

14. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
KEY TAKEAWAYS: Macro trends and concerns
 Private capital markets continue to perform well
 Investors continue to focus on Mid-Market
Buyout
 But…it’s not business as usual
 More funds are in the market than ever
 Fundraising is more challenging than ever
 Annualized returns are falling
 Valuations is a major concern for fund managers
 Operational Excellence is a major concern for
investors
14

15. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
 Operational Excellence is a key component
considered by investors when making investment
decisions, fund managers must take action to stay
relevant in a competitive fundraising environment.
 What is Operational Excellence?
 Repeatable processes for efficient fund management
and portfolio company value creation
 Trained and stable team to maintain continuity and
build experience
 Infrastructure in place for thorough performance
reporting and tracking
 Sound risk and compliance policies and controls
 Cyber security and data privacy
OPERATIONAL EXCELLENCE: What is it and how does this help fundraising?
15
Source: 2016 EY Global Private Equity Fund and Investor Survey

16. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
 More data-driven that enhances
analytics and reporting
 Benefits of using portfolio
company data
 What types of data are being
received
 Challenges of obtaining
 Steps to overcome
OPERATIONAL EXCELLENCE. Data Challenges for GPs: Portfolio Company Data
16
Source: 2017 EY Global Private Equity Survey

17. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
 Secure and immediate accessibility
 Online data portals
 Three key goals:
 Streamline the fundraising workflow
 Control what data is being distributed
 Enhancing the GP’s servicing capabilities
OPERATIONAL EXCELLENCE. Data Challenges for GPs: Access
17
% of LP’s preferring to receive reports through digital portals
Source: 2017 EY Global Private Equity Survey

18. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
OPERATIONAL EXCELLENCE. Data Challenges for LPs: Making Decisions on Differing GP Data
 73% of LPs struggle to make informed decisions
when comparing differing GPs data
 What solutions are being deployed:
 ILPA DDQ
 Other solutions
18
Source: 2016 eVestment LP DD Trends

19. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
 Ownership of fund vs. ownership of
portfolio company
 Ways to obtain information
 Solutions
 What insight is derived from obtaining
this data?
 Should LP’s have access to this
information?
OPERATIONAL EXCELLENCE. Data Challenges for LPs: Value in Portfolio Company Data
19

20. FUNDRAISING: OPERATIONAL EXCELLENCE IN THE MID-MARKET
CONTACT US
Let’s begin a conversation.
We’d love to discuss your needs and see if
we’re the right partner to help you bridge
your gaps.
p: 646.737.7960 ext. #1001
e: info@steelbridgeconsulting.com
New York:
14 Wall St
20th Floor
New York NY,
10005
USA
San Francisco:
600 California
St.
11th Floor
San Francisco,
CA 94109
USA
Los Angeles:
7711 Center
Ave.
Suite 200
Huntington
Beach, CA
92647
USA
Miami:
8200 NW 41ST
St
Suite 200
Doral, FL 33166
USA
Pittsburgh:
1725
Washington Rd
Suite 305
Pittsburgh PA,
15241
USA
p: 212 350 0100
e: info@preqinsolutions.com
New York:
One Grand Central
Place
60 E 42nd Street
Suite 630, New York
NY 10165, USA
San Francisco:
One Embarcadero
Center
Suite 2850
San Francisco, CA
94111
United States
London:
Vintners´ Place
68 Upper Thames
Street
London
EC4V 3BJ
United Kingdom
Singapore:
One Finlayson Green,
#11-02
Singapore 049246
Portfolio Management Made Easy