Case Study: Private Equity Fund – GDPR & Data Sharing

Client: A leading Private Equity fund managing a portfolio of companies from the manufacturing and service sectors.

Business Challenge: The fund’s growth prompted the integration of portfolio companies to standardize processes. The objective was to leverage synergies in reporting and service provision, which necessitated comprehensive mapping of data flows and establishing a legal structure for them in the form of an internal data processing agreement.

The data flow audit revealed that the fund, being in a development stage, systematically acquires new companies and subsequently conducts a complex onboarding process regarding procedures for services to the companies (such as HR, Finance, IT, and operations), as well as reporting for the company (specifically in the area of finance). Consequently, a multi-faceted in-depth audit became necessary, consisting of an analysis of existing documentation, an examination of tools used in the process, audit meetings with C-level managers responsible for business processes, and coordination of activities with the fund’s legal department.

Due to the time-consuming nature and the priority of day-to-day operations, the project was executed as an internal audit, conducted fully operationally by the law firm. The entire project was implemented in the Legal Department as a Service model, where the law firm assumed the operational role. This allowed for deep regulatory integration of the portfolio companies without straining the fund’s current legal resources.

As part of the audit, reservations regarding the previous model of data transfer and entrustment were also analyzed. In this regard, the changes concerned the granularity and adequacy of processes and aimed to link the appropriate tools used with data processing activities, so that future periodic audits could be carried out “in context” of the organization in a simplified form.

The concerns expressed by them primarily related to regulatory risks in the area of GDPR and the lack of a transparent liability structure, which in practice paralyzed effective information exchange within the group.

Based on the audit results, a new data flow architecture was designed from scratch, with a comprehensive Intra-Group Sharing Agreement as its key element, allowing for the actual alignment of documentation with business processes and, where necessary, its correction. The supply chain and technological systems were also verified, eliminating security gaps in the tools used throughout the group and updating the register of tools in close cooperation with the group’s IT department. The developed solutions were implemented directly into the organization’s ecosystem.

Result: The use of a unique combination of business awareness and hard competence in data protection law allowed for the creation of a fully GDPR-compliant system. These actions not only eliminated legal risks but, through the optimization of onboarding and reporting, directly translated into an increase in the value of the entire investment portfolio.