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Posted May 6, 2024

Administrator acquisitions: Navigating difficulties

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Most relationships between GPs and their fund administrators run smoothly year after year. But as the first piece in this series explained, if your fund administrator was recently acquired, it’s possible that your experience as a client will suffer as a result. Perhaps there is turnover on your team, and you need to build new relationships. Maybe some institutional knowledge gets lost in the shuffle, and small mistakes snowball into serious reporting issues by year’s end. Or maybe you simply become a small fish in a big pond and don’t get the same level of support.

Should things with your fund administrator become rocky in the wake of a merger or acquisition, there are interim steps that can mitigate or resolve many problems. But it’s critically important to act as soon as you know of any issues rather than letting them pile up. After all, any mistakes made by your fund administrator—like posting documents to the wrong investor portal—are a reflection on your firm.

Communicate early and often. You undoubtedly established clear expectations regarding timing and accuracy at the start of your partnership with this administrator. If deadlines are slipping, data is increasingly mismanaged, or other problems pop up, request a meeting with your team to discuss them. Follow up with a written memo detailing the problem, the agreed solution, and the metrics by which “correction” will be assessed.

Be specific. Cite precise examples where the fund administrator’s performance is falling short of agreed levels and its impact on your firm. Describe exactly what’s going wrong, how it’s affecting your operations, and how it should be corrected.

Define improvement. Set clear expectations regarding improvement. Ensure that both parties understand and agree to the corrections that will be made and what “doing it right” looks like. Don’t let this become an ongoing issue where your fund administrator improves slightly but fails to deliver the support you need.

Request an action plan. Ask your fund administrator to outline any strategies they plan to implement to address the issues and improve future performance. This may include timelines, benchmarks, and performance metrics. Don’t accept handwaving reassurances; insist on a clear roadmap toward improvement.

Monitor progress. Feedback may be unpleasant, but it’s essential. Follow up with your fund administrator to ensure that the promised improvements are being implemented. Provide feedback along the way and promptly address any new issues that arise. Hopefully, you can back off on the monitoring after a few reporting periods, but with such a crucial aspect of your fund in the hands of a third party—LP reporting, compliance, and financials—you just can’t cross your fingers and hope.

In the worst-case scenario—if your concerns aren’t taken seriously or problems aren’t being resolved—it might mean you’ll need to find a new fund administrator. The final part of this series will explore how to handle switching fund administrators. It isn’t simple, but it can be done.