By Gareth Hewitt, Founder, LemonEdge.
Private markets run on confidence. Performance still matters but investor trust increasingly depends on whether a general partner (GP) can defend the numbers behind it and whether a limited partner (LP) has enough transparency to test and reconcile those numbers for itself.
A capital account balance, valuation movement, fee calculation or distribution is no longer just an output. It needs to be able to be explained clearly, consistently and without caveats. If a GP cannot say where it came from, why it changed and how it was approved, confidence can quickly weaken.
That is becoming harder to manage. Private markets have grown more complex, while most back-office processes have not kept pace. Fund structures span multiple entities, currencies, strategies and jurisdictions. Reporting demands have increased. LPs are asking more detailed questions and expecting faster answers.
As a result, critical outputs are under more scrutiny at the very point when the processes behind them are becoming harder to manage consistently.
Where Confidence Starts To Fray
Private markets firms have always relied on experienced people to ensure processes work. But as reporting demands and investor expectations rise, many firms are leaning too heavily on human effort to cover gaps their systems should be handling.
When reporting slows or calculations no longer fit neatly into the workflow, the usual response is to pull in additional support just to keep things moving. That may ease the immediate pressure but it is not genuine scale. It simply shifts the burden onto teams, who are left to absorb complexity through manual effort rather than supported, repeatable processes.
Across private markets, offline workarounds are no longer the exception. They have become part of how many firms get the job done. When a fund structure involves bespoke allocation rules, side-letter terms or multi-currency reporting, the core system often cannot carry the calculation all the way through.
That is when teams reach for spreadsheets to fill the gap, whether for capital account movements, fee calculations, waterfall models, valuation adjustments, capital calls or distributions. Administrators have to carry out manual checks. GPs are forced to keep parallel records so they can stand behind the numbers they are being asked to approve.
Those layers may get the numbers over the line, but they also make them harder to defend. Once calculations, adjustments and approvals are scattered across spreadsheets, emails and separate records, it becomes much harder to show what changed, who signed it off and why the final number should be trusted.
The commercial pressure around all of this is intensifying.
LP appetite has not disappeared. In its 2026 Global Private Equity Report, McKinsey found that around 70% of surveyed global LPs planned to maintain or increase their private equity allocations in 2026. That points to continued demand, but it also means more capital flowing into structures that are already becoming harder to administer and report on. At the same time, fundraising remains more selective.
Managers may still have access to investor demand, but they are being asked to work harder to win capital. Operational discipline is now part of the evidence base.
Transparency is where the pressure becomes most direct. CFA Institute wrote in September 2025 that opacity had become private markets’ second biggest drawback after lower liquidity, with valuation reporting, performance measures and fees identified as the top transparency concerns for investment professionals.
These are not peripheral issues. They are the numbers LPs rely on to assess performance, understand charges and trust what they are being told.
For GPs, that makes defensibility critical. It is not enough to produce a capital account balance, valuation movement, fee calculation or distribution figure. Firms need to show how the number was calculated, what changed, who approved it and whether the same logic has been applied consistently across the workflow.
When Manual Assurance Reaches Its Limit
Spreadsheets remain common because finance teams know them, trust them and can adapt them quickly when existing systems fall short. They can inspect a calculation, trace a formula and understand how a result was reached. That visibility is critical but so is the familiarity. In many cases, Excel is not used because it is the ideal control environment but because it is the tool teams rely on when the alternatives are too rigid, too slow or unable to handle the detail required.
The problem is that spreadsheet-led processes often hit a ceiling on control. If a calculation looks wrong and a report needs to go out, it can be tempting to change the number directly in Excel. That may solve the immediate issue but unless the adjustment is clearly recorded, approved and booked back into the core system, the offline model and the system of record begin to diverge. The next quarter, that same file may be copied forward without anyone spotting the manual change, allowing errors to spread through the offline process.
As volumes grow, this way of working becomes harder to sustain. More funds, more investors and more reporting requirements mean more manual stitching. Each workaround increases the chance of inconsistency, adds time and increases the chance of errors occurring.
The fundraising backdrop makes this harder to ignore. EY’s February 2026 Private Equity Pulse reported that funds closed at an average 19% discount to target in 2025, while 57% of GPs expected fundraising conditions to improve materially in the coming year. Even if sentiment is beginning to recover, capital remains hard fought. Managers therefore cannot afford processes that leave Limited Partners waiting for basic evidence or reassurance.
Automation changes the dynamic. Faster closes and quicker reporting are critical, but the greater benefit is that automation makes trust scalable. With calculations, approvals and changes captured in connected workflows, firms have a clear record of what changed, when and why.
That gives finance teams a much firmer footing. Instead of constantly reworking numbers, they can focus on exceptions. GPs are better equipped to answer LP queries, and auditors can rely on evidence that is already there rather than having to track it down across multiple sources.
Building Confidence Into the Process
Modern fund accounting technology needs to preserve the clarity people value while reducing the dependency on offline work. That means giving users familiar ways to interrogate data, while keeping calculation logic, approvals and history inside a controlled platform.
When users can see where a number came from, how it was calculated and how it was approved, the system becomes the evidence base for that output. Black-box calculations, even when correct, have limited value if teams still need to recreate them offline to prove the result. In that scenario, firms are effectively running the process twice: once in the system and again in spreadsheets to validate it.
The benefits extend across the operating model. Quarter-end becomes more predictable because the same rules are applied consistently. LP reporting becomes more responsive because data and evidence are easier to access. Audit support becomes less disruptive because activity is recorded as part of the workflow. Teams spend less time reconciling and more time reviewing exceptions.
Private markets will only become more complex. Bespoke terms, nuanced calculations and evolving fund structures are part of the asset class. Firms that cannot manage that complexity transparently will face more pressure wherever trust is tested, including LP reporting, audit, fundraising, fee discussions, valuation reviews and distributions. The firms best placed to compete will be those that can show the process behind each number, without having to reconstruct it after the fact.
As expectations rise, firms need systems that help them produce clean outputs quickly and explain them with confidence. The alternative is a reporting model where teams continue to validate figures retrospectively and add headcount to absorb work their systems should already support.
That may have worked when scrutiny was lighter and cycles were slower. It is much harder to justify now. In private markets, the firms best placed to maintain confidence will be those that can show not only what the number is, but exactly how it got there.
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