Due to the increased investor transparency requirements and a heightened need to maintain regulatory compliance in recent years, there has been a shift toward fund managers outsourcing more back-office functions to third-party administrators. In the competitive market space, it’s critical that fund managers complete their due diligence when selecting a fund administrator and factor in key considerations such as technology, experience, servicing capabilities, and cost. Selecting an outsourcing partner should be the right fit in each of these categories, ultimately leading the chosen fund administrator to be an extension of your firm.

Technology and Innovative Offerings

Selecting a fund administrator that offers sophisticated technology systems can help managers build a significant advantage in the private market space. When exploring outsourcing options, it’s imperative to choose an administrator that embraces harnessing the power of digitization as it enhances fund managers digital capabilities including real-time access to critical data. Access to investor portals also allows limited partners the opportunity to review data and reports in a secure, easy-to-access location.

Automation is another key factor to consider when analyzing an administrator’s technology platforms. Automated reporting through platforms such as investor portals is an advantageous mechanism compared to using outdated applications such as Excel spreadsheets as they minimize human error and support efficient data management. Utilizing the power of data and analytics can boost progress, reduce costs, increase risk management, and free up time for general partners and fund managers to focus on the core.

Experience and Expertise

When assessing outsourcing options, it’s imperative to understand each firm’s experience and expertise. Behind a strong partnership with a fund administrator is an experienced team of professionals that includes subject matter professionals in all aspects of the business such as accounting, compliance, and technology. A diverse, experienced team will understand the varying levels of fund complexities and can help fund managers navigate the intricacies of reporting requirements with greater levels of quality, controls, and consistency.

Selecting an administrator that serves clients with similar fund structures and strategies is also beneficial as their team has experience handling comparable fund needs. A fund manager should also consider each administrator’s onboarding process. Having confidence in the team that will assist in transitioning your fund documentation to their systems will lay the groundwork for a positive partnership.

Scalable Service Capabilities

Some fund administrators have the capability to tailor their services to meet a fund’s unique needs, allowing fund managers to leverage the partnership to meet the needs of limited partners through innovative, scalable solutions. As the private equity industry continues to evolve rapidly and limited partner demands grow, selecting a service provider that can help drive business for years to come is essential. A fund manager must consider how their fund or funds will grow. Selecting an administrator that has the flexibility to service growing needs will help avoid disruptions during expected, or unexpected periods of growth and increased complexity.

Another key component to be mindful of is the range of service offering capabilities. Fund administrators that offer comprehensive back-office solutions are most desirable. Partnering with a full-service provider that can manage all core services such as fund accounting and reporting, treasury services, and investor relations are key to a fund manager’s success.

Cost Structure

Fees are a top consideration for most fund managers when seeking to outsource their back-office solutions, and cost transparency is vital during initial due diligence conversations. When inquiring about costs and services, be aware of additional fees that may be charged for work outside of standard services. While additional fees do not equate to a higher cost structure, managers must keep in mind the various pricing measures when comparing multiple fee and service proposals to ensure a fair assessment with internal decision makers.

Although not always the case, emerging managers or those with a relatively small AUM are likely to benefit from selecting a small to mid-sized administrator, while more sizeable funds typically seek larger administrators for their outsourcing partner. Boutique service providers understand that cost structures are not one size fits all and can customize their services and fees to best fit a fund’s reporting requirements and accounting needs.

Finding the right fund administrator who can support and enhance a fund manager’s performance is critical. Considering these key factors can help guide the decision-making process when evaluating, and re-evaluating service providers for start-up and established funds. Partnering with an experienced fund administrator will serve as an extension of your firm, and allow your team to focus on raising capital, investment decisions, and increasing returns for your investors.

The Ultimus LeverPoint Difference

Ultimus LeverPoint Private Fund Solutions tailors our unique service offerings to meet your specific needs, with the ability to work with complex and unique fund structures combining fund administration with Management Company, General Partner, Investor and Treasury services. You’ll have confidence that your back office is administered by a dedicated team of industry professionals that operate with a boutique, high-touch approach. By combining this with state-of-the-art technology, we give private equity firms peace of mind knowing that the complex reporting requirements will be met, and that the due diligence process will be executed flawlessly.

Visit us at https://www.ultimusfundsolutions.com/ for more information.

ULP # 17989769 3/19/2024