In Private i 5, we have integrated advanced analytics, including the Index Comparison Benchmarking (ICM) tool, in the reporting module. From the Private i Analyst reporting desktop, it is possible to run ad hoc ICM calculations on one or more investments, or to run built-in ICM reports.

The first inkling of “advanced analytics” in Private i came into being about ten years ago with our first implementation of the Long- Nickels Index Comparison Method (ICM). The ICM allows you to calculate an IRR as if your cash flows had been invested in an index, such as the S&P 500. The benchmark spread---that is, the difference between the normal IRR and the IRR_ICM---is a compelling indicator of how your investments compare to a public market or other index.
 
A new version of the popular Adjusted Ending Value report that reflects the MIRR is also now available through the Advanced Analytics toolkit. We are looking forward to adding more performance calculations to the Advanced Analytics toolkit, which may be licensed separately.

With this tool, you can easily answer questions such as:

• How would your money have fared if it were invested in an index fund that tracks the S&P?
• How does your performance compare with vintage year benchmark returns from Venture Economics?
• Does your portfolio outperform the S&P by 300 basis points?
• What is the performance of your 1999 Buy Out funds compared to Venture?

For more information about Index Comparison Method benchmarking and some reasonable, easy-to-follow examples of the metrics, see Chapter 11 of  Inside Private Equity: the Professional Investor's Handbook or contact James Bachman, Director of Research at the Burgiss Group, to discuss.