|There is a further trend taking place where private equity funds that have outsourced administration functions to third parties that are not focused on this sector realise they need to trade up to firms with dedicated technology, expertise and infrastructure to deal with the increasing complexity of administering private equity funds.
Whether you are out-sourcing administration for the first time or considering moving to an administrator with more experience and focus on the private equity sector, Centaur shares its best practices for a smooth transition:
- SERVICE LEVEL GOALS
The first step to an effective administration appointment is to define your objectives and goals. Clear and timely communication is key to address potential issues that may arise and a detailed timetable to be agreed between the GP and the fund administrator is essential. At Centaur, dedicated teams are put in place for the on-boarding of each private equity fund client.
- KNOWLEDGE TRANSFER
It is vital for the administrator to obtain a full understanding of the fund’s existing operations and structure, including all connected entities such as SPVs and co-investment vehicles. Our clients determine the shape and nature of the services they require, so Centaur assigns a client service team at this stage, well in advance of the service start-up date. All LP records are checked as part of the on-boarding process to ensure they are accurate and current with legislation. Additional checks are made to identify areas where efficiencies can be made, ultimately leading to better reporting once the administrator appointment goes live.
- DATA COLLECTION AND INTEGRATION
Fund data may present challenges. Funds store data in different formats, from spreadsheets to complex databases, which the new administrator must collate and integrate into its technology platform. Bringing both financial and non-financial data from disparate sources into a new system can be a mammoth task so it is important for the fund administrator to have robust systems and processes in place.
- PARALLEL ADMINISTRATION
Operational stability is core to a successful transition service. In this period between contract signing and service start-up, experienced administrators execute a parallel administration service, including reporting, reviewing and risk management. Appropriate bank accounts are set up, legal documents are reviewed, and relationships are developed and maintained with the fund’s external service providers, such as auditors, lawyers and bankers. These steps ensure that costs are kept to a minimum.
- ADMINISTRATION SERVICES GO LIVE
During this final phase of the on-boarding process, systems and processes are tested, accounting records are prepared, and all stakeholders are informed. At this point, Centaur imports and reconciles all historical data so that auditors can liaise solely with Centaur for the entirety of the accounting period. Once the fund is up and running, Centaur’s on-boarding team continuously anticipates clients’ future requirements and presents ideas in a proactive manner.
Karen Malone, Founding Partner of Centaur Fund Services, says “At Centaur, senior management is heavily involved from the initial engagement with the GP through to the administration services going live, ensuring the smooth on-boarding of private equity funds. We remove complexity, uncertainty and unfamiliarity from the on-boarding process by using the best people, backed by the best processes in the industry.”