Few would disagree that private equity experienced a challenging year in 2023. While the sector remained resilient, inflationary pressures, rising interest rates and geopolitical uncertainty all weighed on the overall deal market.
In an uncertain environment, efficient, effective fund administration will be vital to keep LPs happy and ensure GPs can focus on the vital task of creating opportunities and dealmaking.
Leveraging the capabilities of the right third-party fund administrator can bring a wide range of benefits, including:
- Resolving staffing and resourcing issues: Tight labor market conditions make recruiting and retaining high-quality private equity administration professionals a constant challenge. Outsourcing to a high-quality provider puts your fund administration in the hands of a team of experienced experts.
- Keeping up with innovation: Technology to automate fund administration is evolving at an accelerating rate. Third-party administrators can use their scale and relationships to give you access to cutting-edge technology at a low-cost while minimizing integration issues.
- Meeting regulatory requirements: Regulation is constantly evolving, creating a growing reporting burden for private equity firms. Partnering with an administrator with the requisite experience and resources to monitor and interpret regulation can help you remain compliant and removes the compliance headache, freeing your team to focus on their core role.
- Tapping into non-institutional capital: High-net-worth clients are a huge growth area for private equity managers but accessing this capital can create its own challenges. An established third-party administrator will have the flexibility and experience to provide effective support when accessing new sources of capital.
- Pursuing international growth: Another way to access new capital is by expanding into new geographies. Working with a fund administrator that has a global presence, specialist solutions and relevant connections can be invaluable to maximize opportunities while minimizing risk.
- Operational due diligence expertise: Investigating a target company to make sure it’s a good fit for a fund is crucial but time consuming, particularly as business models become more complex. Outsourcing due diligence to a third-party with the right technical knowledge saves time and mitigates risk.
- Addressing the cybersecurity threat: Private equity firms have a legal responsibility to keep sensitive client data safe. With cybercrime increasing in both scale and sophistication, working with a high-quality fund administrator that understands the threat both ensures compliance and reduces risk.
To find out how JTC can help your private equity business, get in touch with Jeff directly.
