MJ Hudson Acquires PERACS
Asset management consultancy firm MJ Hudson has announced the acquisition of PERACS, a fund performance analytics solution.
A New Approach to Differentiation
Achieving differentiation in the service provider arena has long presented a challenge given the presence of many experienced firms competing in the space. Recently, we have seen consultants, fund administrators and advisors looking to technology, market data and other unique offerings in an effort to achieve competitive advantage while complementing existing services and future-proofing their businesses for the increasing complexity we are likely to see in future years.
MJ Hudson has been a prominent proponent of this approach, acquiring cutting-edge solutions and integrating them with traditional services to power a next-generation suite of services and products. MJ Hudson’s vision statement also supports this strategy, stating that the future will be very different– increasing complexity and regulation, the abundance of data and subsequent issues with effective analysis… adapting and utilizing advanced technology is core to succeeding in the future of private equity.
This is the fourth acquisition into MJ Hudson’s Data & Analytics division within the last couple of years, making the division approximately one third of the broader MJ Hudson Group. Previous acquisitions in this space include fund marketing and analytics firm Meyler (2020 – now MJ Hudson | IR & Marketing Solutions), ESG consultant and reporting service Spring Associates Responsible Investor Services (2019 – now MJ Hudson | ESG & Responsible Investing), and FX and custodian benchmarking analytics provider Amaces (2018).
On announcing the acquisition, Odi Lahav, COO and head of MJ Hudson’s Data & Analytics division said:
“We are delighted that Professor Gottschalg and his team have decided to join the Group. He is well known to the senior management team at MJ Hudson and we have followed his firm’s progress with great interest, for a number of years. The acquisition adds yet more proprietary methods, models, and tools to MJ Hudson’s Data & Analytics division, supporting our ambition to bring greater transparency to the expanding alternatives industry. We have already identified a number of existing MJ Hudson clients who will benefit greatly from fund performance analytics and there are, likewise, PERACS clients that we can introduce to the wide range of services provided by MJ Hudson. Looking further ahead, the deal helps us to power the next generation of analytical software tools for our clients, built with machine learning techniques by our own developers.”
Professor Oliver Gottschalg, CEO of PERACS, commented:
“I am a long-standing admirer of MJ Hudson and its approach to the alternative assets market. With the additional resources and market platform this transaction affords, we will be able to accelerate the release of new tools and provide our clients with an even better service. In particular, the breadth and depth of MJ Hudson’s services and its international network both provide exceptional opportunities for growth.”
SPRING ASSOCIATES RESPONSIBLE INVESTOR SERVICES – Now mj hudson | ESG & Responsible Investing
The rising number of UNPRI signatories is an indication that investors are increasingly recognizing the importance of ESG as risk mitigation tool and as a driver of value creation. While the ESG landscape has matured relatively well for private equity, firms often struggle with designing their approach and implementing it into their investment processes.
MJ Hudson Spring supports investors in the design and implementation of responsible investment strategies, ranging from negative screening to impact, throughout their investment process. With proprietary software & tools fully tailored to fund ESG workflow, Spring focuses on the overlap between business value & ESG, translating goals and long-term risks into practical roadmaps.
MEYLER – NOW MJ HUDSON | IR & MARKETING SOLUTIONS
MJ Hudson Meyler, which extends MJ Hudson’s 2015 acquisition of Craig-Greene & Company, is a fund marketing solution which specializes in the alternative assets industry, with a particular focus on helping clients distill their message and generate asset momentum. It challenges its clients to think differently about how they approach market themselves through a variety of client services such as brand strategy development, website and materials creation, videos and placement services. In terms of software, it offers its clients access to a CRM system and integrated marketing analytics which are typically focused around fundraising and investor relations.
MJ Hudson’s IR & Marketing Solutions team believes in applying the latest innovations in branding and software to the alternative assets industry, and its CRM setups allow users to access information such as when potential allocators are viewing materials and other innovations which facilitate a more targeted and intelligent approach to gathering capital.
PERACS – NOW Mj HUDSON | FUND PERFORMANCE ANALYTICS
Founded in 2005, the team provides institutional investors and alternative assets fund managers a suite of comparable performance metrics based on proprietary data and research tools. Through use of these services, GPs are able to objectively understand their own value creation approach to improve strategic positioning during fundraising, in addition to providing their LPs with reliable and credible metrics on key attributes of their track record and strategic positioning / differentiation. On the LP side, clients can evaluate the risk / return profile of new funds and their existing private equity portfolio to improve their fund due diligence and portfolio construction / optimization processes. The firm is expected to launch a number of additional products and services in the near future, including cash flow forecasting and VAR (value at risk) tools.
Trends in Fundraising and Fund Assessment
MJ Hudson’s last three acquisitions provide valuable context on the direction the fundraising / fund assessment process is moving toward.
One LP recently described their fund sourcing activity as a ‘triage’ – incoming opportunities are either rejected outright, placed in a pile to review before moving to a deeper dive, or immediately receive attention due to a pre-existing relationship and knowledge of the fund manager. Re-ups are also a key consideration and are often subject to their own evaluation process. With some major LPs looking to reduce their number of GP relationships, just getting an LP to review a fund is a major challenge for most firms in fundraising mode. A lot of today’s fund marketing activity is planned around this dynamic.
LPs have a fiduciary responsibility to their stakeholders to engage in a best-practice fund sourcing process. As the ratio of available funds to planned commitments gets ever-larger, LPs must also consider how their fund identification and evaluation processes must evolve if they are to retain confidence in their ability to select the best funds.
To solve for this issue, several fund due diligence tools have emerged and started to improve and streamline the fundraising / fund assessment process. MJ Hudson’s last three acquisitions are all designed to help with this as well. We expect to see many more solutions emerging in this space to improve fundraising analytics and effectively connect LPs & GPs through networks.
How will MJ Hudson Utilize PERACS in Private Markets?
MJ Hudson’s acquisitions will allow the firm to provide data and analytics tools to both its GP and LP clients for an effective fundraising process, supplementing its advisory and professional services.
MJ Hudson’s IR & Marketing Solutions services allow GPs to create a unique brand and fund marketing strategy with analytics tools. The firm’s newly acquired Fund Performance Analytics team has the potential to add a robust quantitative analysis aspect, leaving no gaps in the GP’s fundraising process. On the LP side, the acquired PERACS services will help streamline the fund evaluation process through advanced metrics and benchmarks, and MJ Hudson’s ESG & Responsible Investing team will allow for responsible investing through ESG screening.
In the future, there may also be potential to create a network within the MJ Hudson ecosystem to connect LPs & GPs that utilize the aforementioned tools to streamline the fundraising process end-to-end.
Adopting Technology is Necessary to Stay Competitive
Fundraising for the vast majority of firms has been increasingly challenging in recent years, with processes routinely exceeding 18 months. Finding well-aligned LPs, connecting with them, effectively differentiating and getting insightful feedback to iterate a pitch is complex and time-consuming. Thankfully, technology solutions are providing new and innovative ways to streamline the process. The space is growing rapidly for both the LP and GP sides, and there are already several products that are creating immense value to their clients. You can see an overview of the space in our front office solutions map for GPs.
We are also seeing larger players in and around this space acquire technology solutions to better serve their existing clients. The acquisition of PERACS is another addition to the growing trend of consultants acquiring private equity specialized data and analytics firms, such as the recent acquisition of SPS by Bain. We expect to see this trend more prominently in the future, in addition to new entrants emerging and in-house products being developed.
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