How we assisted a Secondary Private Equity firm in creating a performance tracker for publicly listed asset managers

March 17, 2023

The Context

The client, a Secondary Private Equity firm, wanted to benchmark themselves against the industry experts and gain insight on the potential additional revenue streams. The client wanted the TresVista Team to track the performance of some of the top publicly listed asset managers (PAM) around the globe, including coverage around broker valuation and estimates for the same. The goal was to come up with a process to track the performances of these managers and standardize the numbers in a way that they are comparable to the client’s business model.

The Objective

To track the performances of publicly listed asset managers and run a comparative analysis to assist with client benchmarking.

The Approach

The TresVista Team followed the following process:

  • Referred to multiple brokerage reports to research some of the largest public asset managers (PAM) to understand their valuation methodologies. To do so, the team deep-dived into the client’s revenue-generating sources to gain various insights and had multiple discussions with the client to understand the firm’s business model
  • Built a template that can be updated quarterly so that the refreshed results could flow into a presentation deck benchmarking each PAM
  • Assisted the client in tracking the Perpetual Capital, AUM, and FGAUM for each of these assets to help understand the manager’s potential

The Challenges We Overcame

The major hurdles faced by the TresVista Team were:

  • Unavailability of data on the smaller and more comparable peers, revenue and expense breakdown (making it difficult to strip and identify the required numbers)
  • Working with ~50+ coverage reports simultaneously
  • Absence of standardization in the various valuation methodologies used by each broker for each PAM, inconsistent nomenclature, and metric terminology across brokers

The TresVista Team overcame these hurdles by analyzing the large public asset managers because they were well covered, and their data was widely available. The team decided to conduct their own valuations based on the forecasted analysis to standardize the valuation methodology. The team carried out extensive discussions with the client and looked through operating models obtained from the brokers to homogenize the nomenclature and meaning of the metrics. The team leveraged the historical margins for each revenue type to segment incomes where segmentation was not available.

Final Product (Sanitized)

The Value Add – Catalyzing the Client’s Impact

The TresVista Team helped the client with data room management. The team also studied historical expense margins to develop an average case that could be used to apportion the revenue items where expense segmentation was not available.