By December, the best fund administrators are already ready for 2018 by working closely with clients all year round.
A year-end planning session with a fund administrator seems like a best practice, but the reality is the nature of private equity means that such planning should take place well before the last month of 2017.
“The best fund administrators will feel like an extension of the internal team,” says Mike Tesoro, Managing Director at Gen II Fund Services. “So, we’re going to be well aware of the key risks, pain points and the deliverables expected throughout the year.”
Given the need for quarterly reporting, along with transaction related work, it’s hard to imagine that any fund administrator wouldn’t know well in advance of any looming deadlines or needs.
“We have weekly and bi-weekly calls with clients,” says Tesoro. “It’s a dynamic and interactive relationship which goes well beyond merely delegating tasks to be done.” The communication exchanges will focus on upcoming expected activity and periodically discussing how the administrator and GP can enhance the process for all involved, including limited partners. This requires both frequent contact between administrator and GP, and a relationship of trust and respect.
“Our clients know we have extensive administration and operational experience and they tap us for that expertise. By example we become a value-added voice in our clients’ plans to raise a new fund, venture into a new asset class, or open an office in a new geography.
That close, trusted partnership is all the more necessary given the demands of LPs and regulators today. “Ten years ago, there wasn’t the same level of operational due diligence that’s required today. There are different risks as well, including data protection, cybersecurity, and regulatory concerns as our clients expand,” says Tesoro. “That’s why we need to have such close ties with our clients so we can proactively support their needs.”
Tesoro’s ability to effectively contribute to his clients is based upon his long tenure of 17 years in the industry. Successful GPs are dynamic organizations never standing still. With the appropriate, proactive discussions the administrator can plan for the service requirements around increased fund activity and complexity, as well as new launches.
“At Gen II the support of our clients’ growth is always the priority. Introductions of additional staff and firm resources are closely measured and constantly monitored so that we can maintain the highest level of performance.”
So the very idea of a year-end planning session becomes a much more meaningful endeavor if a fund administrator is close enough to the client to properly serve them throughout the year. For the best administrators, December should allow time for GPs and fund administrators to enjoy the holidays, since the heavy planning has all been done well before now.