Accurate Calculations and Streamlined Distribution Process Deliver Better Operational Methodologies and Improved Investor Service
Client
Omaha Beach
Background
Omaha Beach Capital provides diversified opportunities in small- and middle-market private equity strategies through secondaries and co-investments. The Omaha Beach team has developed expertise to identify and implement a differentiated approach to PE secondaries and co-investments to deliver superior risk-adjusted returns. Omaha Beach partners with middle-market private equity sponsors targeting companies with revenues between $10 million and $100 million in the United States, Canada, United Kingdom, and Europe. Led by co-founders with more than 50 years of collective investment management experience, the firm was founded in 2014 and has offices in Miami, FL and New York, NY. Omaha Beach Co-Founder & Managing Partner Eric Fishman and Controller Andrew Mladek led the firm’s fund administration selection and transition initiatives, bringing NAV Fund Services on board in April 2024.
How NAV Helped
Smooth Transition to a New Fund Administrator
Challenge
The Omaha Beach team was concerned that transitioning their two longstanding funds from an existing administrator to a new provider might be complicated and chaotic, with a negative impact on investor services and internal resources. But, due to persistent issues with calculation accuracy and operational logjams, Omaha Beach decided it was in the best interest of the business to pursue a change in fund administration services.
Solution
NAV’s smooth onboarding process — developed and refined through hundreds of successful client transitions — provided the Omaha Beach team with critical support throughout the transition.
Outcome
“The onboarding process with NAV was handled very professionally without any hassle,” Fishman said.
Capital Call and Distribution Support
Challenge
Accurately aligning historical capital call and distribution allocations with intended methodologies as defined in fund offering documents, as well as maintaining best-in-class support on an ongoing basis.
Solution
During independent review of historical information in the transition period, NAV identified inaccuracies in allocations based on PPM provisions and proposed true-ups in the first official reporting period. After the Omaha Beach team completed a careful review of NAV’s amended calculations, corrections were implemented in Q1 2024 books.
Outcome
“We are pleased that our current call and distribution processes are now accurate and past miscalculations have been corrected and addressed,” Fishman said. “Additionally, NAV provides outstanding support for our ongoing capital calls and distribution needs, promptly forwarding calculation data so we can verify allocations, review notices, and get them out to investors on a consistently timely basis.”
Waterfall Administration
Challenge
Restoring Omaha Beach’s confidence in the accuracy of previously problematic waterfall calculations and addressing investor data integrity concerns.
Solution
The NAV team thoroughly analyzed all data utilizing robust proprietary software designed to easily handle complex waterfall calculations. NAV identified the errors in the prior distribution calculations and provided Omaha Beach with corrected carry calculations, incorporating preferred returns and catch-up calculation steps and factoring in life-to-date capital activities. True-ups were processed with the next distribution event.
Outcome
“We are satisfied that the corrections NAV has provided are accurate and fully rely on and trust their decisions and calculations going forward,” Mladek said. “Even with the huge volume of data, NAV was quick to run all investor capital activities on their Transfer Agency system and presented a simple yet very detailed report with their findings for our review, enabling us to share correct and updated performance measures with investors.”
Investor Allocations
Challenge
Variances and inaccurate investor allocation calculations were identified during NAV’s replication and review process.
Solution
Upon discovering differences between how fund data had been calculated vs. NAV’s accounting processes, NAV brought the discrepancies to the client team’s attention — including allocation ratios, negative investor commitments, ratios for allocation of preferred and capital contributed in carried calculations, and non-inclusion of GP (in investor capacity) in calculation of MOIC and IRR.
Outcome
“NAV walked us through a comprehensive explanation of the variances they identified in our historical data and how and why we needed to adjust our calculations within accounting norms,” Mladek said. “They dealt with all of our questions knowledgeably and thoroughly, making it easy for us to understand the standards that would be used going forward.”
Audit/Tax Implications
Challenge
The Omaha Beach team was concerned that switching administrators during the last quarter of their financial year might complicate tax and audit data.
Solution
NAV replicated the three previous quarters of the year to provide complete and cohesive YTD data for tax and audit purposes.
Outcome
“NAV not only replicated the existing admin data, at no additional cost to us by the way, but did recalculations and pointed out variances,” Fishman said. “NAV did a thorough analysis of the historical data and presented some really good logical points to better align accounting reports with fund documents.”
