The “Ugly Duckling” of Fund Administration

“Risk comes from not knowing what you are doing.” This was one way that Warren Buffet described the dynamic world of Finance. How much more secure would you feel about your investments if you knew the right thing to do all the time? Well, Reliant Fund Services has the experience to guide you and your fund through all the administrative needs at all levels of a funds structure.

A private equity or venture capital fund is typically comprised of three levels, the fund itself, the general partner, and the management company. Not surprisingly, all fund administrators are eager to be the administrator for the fund and the general partner; Reliant Fund Services is no different. However, what sets Reliant apart from other firms is how we embrace and approach the management company. We want it, enjoy administering it, and above all else – we are good at it!

Left in the Lurch

The management company tends to be the less desired, ugly duckling, of fund administration because it usually requires a different skill set of the team and can be less profitable. But is also a very necessary and important part of a truly comprehensive fund administration practice. Working with a firm that does not want or embrace the management company assignment is often met with the wrong mindset by the firm. Within the management company, you need to plan and you need to be proactive. When a reluctant firm is tasked with the management company, they tend to take the approach of an outsourced contractor and have a reactive mentality, resulting in lost opportunities and synergies. When given a job you do not want, you tend not to do it well; an unwilling or hesitant fund admin is no exception.

Since the management company arm is often an undesired aspect of fund administration, it is regularly accepted only when “forced” upon the fund administrator. At Reliant Fund Services, we do every part of fund administration with enthusiasm, even if we are only servicing the management company. Because we recognize the need for it, we enjoy it and we strive to form a partnership with our clients and act as an extension of their management team.

Fund administrators frequently leave their clients to their own devices when it comes to management company administration. It can be frustrating for these clients when left on their own. Reliant encounters this issue with prospective clients. We would rather our clients spend their time and effort adding value to the funds bottom line endeavors instead of being bogged down with QuickBooks, excel or other tedious accounting and administrative functions.

Two is greater than one; or is it?

Having one firm as the administrator for both the fund and the management company delivers a team approach with cohesion and confidence. This single administrator is communicating within itself and its two teams, the fund accountants and management company accountants. A single administrator eliminates the need for a middleman, the client, to maintain communication and direct “traffic” between two separate firms.

Checks and balances can be a concern when one firm acts as both the fund administrator and management company administrator, which often creates this false sense of a need for separation of duties. No need to fear, the accounting world’s use of auditors ensures those checks and balances are in place and your entire fund structure is being serviced appropriately and correctly.

Continuity improves dynamic ability. At Reliant, we offer a specialized team of management company accountants who work closely with our fund administration team. Whether it is the “golden fund” or the “ugly duckling” we offer the same passion, dedication, and care to every client and every aspect and level of your fund.