Cost Drives Equity Fund Managers to Make Changes

When managers of private equity funds changed service providers this year, cost, quality and increased portfolio complexity were typically behind the decision.

Preqin, a leading source of data and analytics about the alternative assets industry, says this year’s unusually challenging environment is prompting fund managers to more intensely evaluate their service providers. The relationship between cost and quality of service is being scrutinized especially closely.

“Managers,” Preqin comments, “Want service providers that can make a difference, whether that’s through streamlined processes, increased efficiency, or the adoption of innovative and value-add technologies.”

In a report out last week, Preqin discusses the results of its analysis and survey of fund managers. The short version is that among those changing law firms or accountants cost was the leading reason. Or, as Preqin described it, “Cost is king.

“Half of all fund managers surveyed cited cost as a reason for swapping their fund formation law firm, followed by 44% and 40% for transactional law firms and accountants respectively.”

Cost wasn’t the only reason. Portfolio complexity was mentioned as often as cost for changing fund formation law firms. And it was second behind cost as the reason for changing accountants.

Quality of service factored into the decision, though it was less of a driver than cost and complexity. However, among the 26% of private capital fund managers that changed administrators, the quality of service was a deciding factor. 53% mentioned that as a reason for making a change. Only one in five managers mentioned cost.

Preqin sees the issue for administrators as one of technology.

“From due diligence to investment monitoring and real-time reporting to LPs, processes across the alternatives universe will be streamlined and improved. Those service providers that fail to embrace emerging technologies will fall behind,” says Preqin.

Alternatives fund service providers - blog.jpg

In a sponsored Q&A with Tim Toska, global head of private equity at service provider Alter Domus, he talks about some of the unprecedented challenges private equity managers confronted this year, not the least of which was trying to build relationships remotely. Working remotely has demonstrated the critical importance of technology to fund managers.

“If you’re working remotely, you’re not able to handle everything, so having a strong service provider allows private equity managers to really focus more on the critical areas of their business,” he says.

In a second sponsored Q&A, this one with Nikolaos Perros, head of private equity at Citco Group, he makes the argument that after weighing the need to invest heavily in technology, many fund managers have chosen to partner with administrators that have already done that.

Cybersecurity, data conveyance and access to a digital portal to replace paper-based processes are the capabilities fund managers most need. “To deliver on these three aspects, as well as help firms evolve in a digitally driven world going forward,” Perros says, “Intimate technology expertise is a must for fund administrators.”

Photo by Ishant Mishra on Unsplash

How Wellness Initiatives Can Strengthen Your Workforce
General Interest Green Key News Leadership + Management Worklife

How Wellness Initiatives Can Strengthen Your Workforce

#WeAreGreenKey: Spotlight on Alexis Schumacher
Accounting + Finance General Interest Green Key News Worklife

#WeAreGreenKey: Spotlight on Alexis Schumacher

Women in Leadership at GKR
General Interest Green Key News Leadership + Management Worklife

Women in Leadership at GKR

Spain Becomes First European Country to Offer Paid Menstrual Leave
General Interest Green Key News Human Resources Worklife

Spain Becomes First European Country to Offer Paid Menstrual Leave

Green Key Unlocked: Benefits of Travel Nursing
General Interest Green Key News Healthcare Worklife

Green Key Unlocked: Benefits of Travel Nursing

How to Maintain Culture in Remote Environments
Architecture + Engineering General Interest Green Key News Worklife

How to Maintain Culture in Remote Environments

Tips to Strengthen Time Management
General Interest Green Key News Leadership + Management Worklife

Tips to Strengthen Time Management

#WeAreGreenKey: Spotlight on Katie Kressel
General Interest Green Key News Human Resources Leadership + Management Professional Support Worklife

#WeAreGreenKey: Spotlight on Katie Kressel

Workplace Trends 2023
General Interest Green Key News Human Resources Leadership + Management Worklife

Workplace Trends 2023

#WeAreGreenKey: Spotlight on Jason Kien
Accounting + Finance General Interest Green Key News Leadership + Management Worklife

#WeAreGreenKey: Spotlight on Jason Kien

How to Use ChatGPT to Build a Resume
General Interest Green Key News Information Technology Marketing Technology Worklife

How to Use ChatGPT to Build a Resume

Green Key Unlocked: Data Roles in IT
General Interest Green Key News Information Technology Worklife

Green Key Unlocked: Data Roles in IT

The New Marketing & Sales Team
Marketing Technology

The New Marketing & Sales Team

#WeAreGreenKey: Spotlight on Matt Schirano
General Interest Green Key News Information Technology Leadership + Management Worklife

#WeAreGreenKey: Spotlight on Matt Schirano

Green Key Unlocked: The Effect of Tech Layoffs
General Interest Green Key News Information Technology Leadership + Management Worklife

Green Key Unlocked: The Effect of Tech Layoffs

How to Prepare for a Recruiter Interview with a Staffing Agency
General Interest Green Key News Human Resources Leadership + Management Worklife

How to Prepare for a Recruiter Interview with a Staffing Agency

5 Ways to Make Your Job More Meaningful
General Interest Green Key News Worklife

5 Ways to Make Your Job More Meaningful

Minimum Wage Increases in 2023
Accounting + Finance Architecture + Engineering Financial Services General Interest Green Key News Healthcare Human Resources Information Technology Leadership + Management Legal Support Marketing Technology Pharma Professional Support Worklife

Minimum Wage Increases in 2023

2023 Recruitment Trends
General Interest Green Key News Human Resources Leadership + Management Worklife

2023 Recruitment Trends

#WeAreGreenKey: Spotlight on Carissa Iacona
General Interest Green Key News Marketing Technology Worklife

#WeAreGreenKey: Spotlight on Carissa Iacona

Latest Blog Posts
View All Posts
How Wellness Initiatives Can Strengthen Your Workforce

How Wellness Initiatives Can Strengthen Your Workforce

Establishing an inclusive culture and focusing on employee health can boost productivity, encourage teamwork, and increase better communication.
Read More
#WeAreGreenKey: Spotlight on Alexis Schumacher

#WeAreGreenKey: Spotlight on Alexis Schumacher

Her natural ability to communicate, along with some professional experience in public relations and outreach, has allowed her to flourish...
Read More
Women in Leadership at GKR

Women in Leadership at GKR

Although being a woman in a leadership role comes with its challenges, those at Green Key also note the feelings...
Read More