Archive for the ‘Uncategorized’ Category

Technology Solutions That Elevate the Investor Experience.

Subscription technology and investor portals benefit investors (and fund managers, too!)


Technology as a Differentiator

From 2008 through today, the percentage of U.S. wealth held by Baby Boomers has been relatively constant, hovering between 50% and 55%. Over the same period, the wealth share of Gen X, the post-Baby Boomer generation, has risen from 9% to over 28%, according to the Federal Reserve (Q2 2021).[1]

Why does this matter for private equity fund managers? Because Gen X is the first generation to come of age with digital technology — playing video games and using early-generation PCs. As private equity funds vie for assets, technology can be used to elevate the investor experience, differentiating your firm from the pack.

Reassess Your Operating Model from the Perspective of Investors

While private equity fund investors remain dominated by Baby Boomers, the surge in private equity has attracted affluent Gen Xers. Fund managers are wise to rethink their operating models based on shifting demographics. Baby Boomers (born 1946-1964) often seek human guidance and assistance. Gen Xers (1965-1980) prefer automation and online access. Gen Xers want speed, simplicity, transparency, flexibility and real-time data. They want to feel empowered.

Enhance the experience for tech-savvy investors. Technology can be used to make the investor experience more enjoyable. First and foremost, technology should be used to make things easy.

  • Make it easy to perform remote due diligence (in the age of Covid and otherwise)
  • Make it easy to complete fund subscription documents
  • Make it easy to access and download fund data, analytics, reporting and documents
  • Make it easy to submit investor updates and information requests

Technology solutions benefit all stakeholders. As you think about how technology simplifies things for investors, think, too, about the positive implications for your firm, including efficiency, reduced costs, transparency and straight-through workflows.

Define Needs for Each Stage of Investor Engagement      

As a fund manager, assess your investor engagement through three distinct phases:

  1. Pre-Investment
  2. Subscription Process
  3. Post-Close

Each stage provides an opportunity to enhance your investor (and prospective investor) experience.

Stage 1: Pre-Investment. With face-to-face meetings still limited by the Covid pandemic, prospects need ease of access to due diligence materials. An online data room lets you control what each prospect sees and when. Data rooms that provide an audit trail record of user activity can be used by GPs to better understand prospective investor interests and engagement.

Stage 2: Subscription Process. Most investors, fund managers and administrators agree that the fund subscription process is painful and costly. Up to 80% of subscription documents are submitted with errors. Consider how your firm would benefit from an automated process in a secure environment. Imagine the rewards of straight-through processing for your investors, your firm and your administrator.

Stage 3: Post-Close. Tech-savvy investors want online access to fund data, analytics and reports. They want the ability to “slice-and-dice” and download data as needed. Static PDF reports are no longer sufficient.

Two Technologies to Elevate the Investor Experience

At Ultimus LeverPoint, we hear first-hand from private equity managers about the need for technology solutions — for their LPs and themselves.

Upgrade the subscription process through document digitization. Ultimus LeverPoint’s uINVESTORTM is a digital platform that automates the private fund subscription process, allowing investors to complete, sign, and submit “sub docs” online. The platform digitizes subscription documents and provides an artificial intelligence-guided experience, prioritizing information that is relevant to, and required for, specific investor account types. Fund managers invite and onboard investors to their funds. Real-time tracking and transparency give fund managers on-demand visibility into investor activity and fundraising.


  • Intuitive and guided process for investors
  • Efficient process for GPs
  • Straight-through processing for LPs, GPs and fund administrators
  • Streamlined AML and KYC documentation processing

Upgrade investor portal capabilities. Investor portals have been around for years. But capabilities today far exceed those of years passed. Ultimus LeverPoint’s uACCESSTM portal is built to give GPs and LPs online access to sophisticated data visualizations, intuitive reporting and analytics, as well as secure document access. GPs and LPs are empowered to view and download real-time information as they see fit. uACCESS also provides advanced data room functionality for prospective investors.


  • On-demand information for investors
  • Remote due diligence for prospects
  • Transparency for GPs
  • Secure access for all

Partner with Ultimus LeverPoint to Reimagine Your LP Engagement

With vigorous competition for investor capital, one way to differentiate your firm is by using technology to upgrade the investor experience. We’ll help you rethink your operating model to align with the changing demographics of your investor base. Importantly, we’ll focus on elevating the experience of your investors, while creating efficiencies, simplicity and reduced costs for you.

Ultimus LeverPoint Private Fund Solutions provides fund administration solutions to over 210 firms with over $120B in AUA. Our clients are spread over a diverse range of private fund firms across the country, ranging in size from first time firms with AUM of $50M, to established firms with AUM of $19B.



13750624  10/25/2021


Private Equity: Outsourcing Fund Administration in the New Normal

In the new normal, outsourcing presents the opportunity for strategic partnerships that provide solutions to investment managers experiencing increasingly formidable fund administration requirements and challenges.

The pandemic of 2020-2021 continues to affect the private equity markets, causing general partners (GPs) of all sizes to re-evaluate their operating models with a longer-term view on opportunities for improvements that benefit their business and their investors.

How do you find the right strategic partner?

Finding the Right Partner


To reap the benefits of an outsourcing relationship, there are a number of critical factors to consider when selecting the right strategic partner for fund administration:


The ability to meet the current and future needs of you and your investors requires a proven, substantive platform with the level of automation, scale, control, and security expected in an industry leading solution. It must deliver transparency and efficiency to you and to the investor experience. Using a secure, sophisticated platform provides a more controlled and reliable environment for data input and outputs. It mitigates the risk inherent in using spreadsheets, and allows for transparent and secure reporting. State-of-the-art investor portals allow fund managers, GPs and LPs to access online, real-time data and reporting.

The cost of investigating, implementing, and maintaining relevant technology can be expensive and overwhelming for individual managers. Partnering with a fund administrator who already invests in these platforms allows fund managers access to advanced technology while avoiding much of the cost, process and time commitment of in-house implementation and ongoing maintenance.

People & Culture

Sudden growth, changes in fund complexities, and the desire to attract institutional investors can all drive the need to hire staff at a direct expense to the firm when the fund’s back-office work is being done in house. Choosing the right strategic partner for outsourcing fund administration provides a relationship that grows and flexes with a fund manager’s needs. Fund Administrators who serve as an extension of the fund manager’s team become a valued contributor to the business plan.

Relationships, communication and technical expertise are the foundation for a successful Fund Administration partnership. Whether you are a first-time firm with AUM of $50M or an established firm with AUM of $20B+, choosing the right Fund Administrator is essential. Cultural fit, technical ability, and capacity are all critically important; a fund manager is not just partnering with a Fund Administrator but instead are partnering with the human capital of the firm.

Controls and Procedures / Best Practices

As limited partners, or LPs, become more sophisticated, they are requiring more of fund managers, notably in the way of tighter processes and controls. Many institutional investors require fund managers to hire a fund administrator with industry-accepted credentials such as the SSAE18 SOC 1 Type 2 Audit Report. The Fund Administrator you select should provide customized solutions and workflow processes within a controlled environment, helping to reduce risk and potential errors.

LPs also focus on both disaster recovery and cybersecurity policies. The Fund Administrator selected should have documented and tested policies in these areas as well as a clearly defined business continuity plan, which details the process for continuous service and access to client data, should a disruptive event occur.

Experience with Increasing Fund Complexities

Experience shows that fund managers face significant increases in the complexity of their operations, resulting from expanding their product offerings into non-traditional PE and RE investments (e.g., credit, middle-market, infrastructure) and increasing regulatory reporting requirements.

Private Equity funds have evolved from simple, stand-alone limited partnerships to highly complex structures. Creating multiple vehicles within each structure also means complicated allocations and fee calculations. While these complex calculations may be handled in spreadsheets, that carries risk and is a warning flag to larger institutional investors who may want to invest in the fund.

The largest investors have become more demanding in terms of fund reporting. Investors routinely request more detailed quarterly reports with extensive capital account statements, to be delivered within days after the quarter ends. The result is less standardization and far more customization. For managers, meeting these challenges is time consuming, expensive, and difficult.

The Ability to Meet LP and Institutional Investor Demands for Reporting and Transparency

Limited partner involvement in the Private Equity world has evolved to encompass a more sophisticated and institutional investor base. It has become routine for institutional investors and their operational due diligence teams to question valuation risk and transparency reporting. As GPs build more complex fund structures to fulfill LP needs, the need for increased reporting transparency builds as well.

All of this has driven GPs to examine all aspects of administering a fund. Recognizing the growing need for specifically talented staff supported by industry-leading technology in a controlled environment of best practices has led GPs to new considerations: a strategic outsourcing partner that understands LPA mandates, operational deliverables, and technology that can support fund complexities.

Final Thoughts


The rapidly changing need for transparency is the key to staying ahead of the evolving private equity administration requirements, being equipped to offer investors a high level of operational confidence in information provided securely and in real-time. As the result of the growing costs and complexities of supporting these requirements, a strategic partnership with an outsourced service provider offers critical advantages.

Grow with Ultimus LeverPoint


Achieve Scale
As funds grow and their complexities multiply, the impact of having to hire, train and retain staff to support a back-office functions also becomes greater. Gain economies of scale with a qualified Fund Administrator such as ULP. With an effective co-sourcing model, the responsibility for attracting and retaining skilled talent falls on the administrator, who can pool resources across a broad client base, reducing the fund manager’s skills-related risk.

Boost Efficiencies
Making the decision to outsource Fund Administration services is one of the most astute decisions fund managers can make because it boosts efficiencies for their firm and their investors. As reporting demands grow and the need for transparency intensifies, having the right Fund Administrator becomes even more important.

Realize Results
You’ll gain a more efficient business process that mitigates common risks and enables you to focus on your core competencies while providing your investors a level of comfort that comes from third-party independence.

Ultimus LeverPoint leverages both technology and a flexible servicing model that enable GPs to adapt to the new environment and enhance the investor experience. A robust architecture allows ULP to deliver quality services and increase productivity to meet the needs of our clients. Our responsive service model focuses only on the core activities of fund administration. Since we are an independent service provider, our dedicated teams and services won’t be disrupted by the budget cuts, service reductions, downsizing, offshoring and outsourcing.


13205050  07/20/2021


Private Fund Managers: When to Consider a Lift-Out

A Potential Win-Win-Win


The decision to maintain critical but non-core investment management functions in-house versus outsourcing is one contemplated seriously and frequently by private fund managers (“Managers”) looking to optimize their resources. The increasing demands of market complexities and investor expectations require the full attention of private fund managers, highlighting the potential benefits of allowing others to take responsibility for execution and oversight of back-office, fund administration functions. Easing the decision-making burden is the ‘lift-out’ solution.

A lift-out occurs when a third-party service provider, such as an administrator, takes function-specific Manager staff and brings that staff on as their own employees. In turn, the Manager pays the third party for services that used to be considered internal. As a result, lift-outs can provide a win-win-win situation by benefitting the fund manager, the staff and the third-party provider.

Why Consider a Lift-Out?


Lift-outs can be used effectively as part of a long-term strategic decision or to address an immediate or unexpected need. Following are the primary reasons Managers contemplate lift-outs.

Focus on investing. Propelling growth through front-office functions like investing for performance and servicing limited partners is the primary focus of most Managers. By transitioning some or all back-office functions to a third-party provider, the day-to-day onus of managing those operations is placed squarely on the provider, allowing Managers to focus on what they do best.

Ensure continuity. While outsourcing (rather than lifting-out) back-office functions may at first seem appealing, established fund managers often fear the loss of continuity with investors. Further, Managers value their staff, the work they perform, and want to “do right” by them. With a lift-out, Managers benefit from retention of staff institutional knowledge and relationships, ensuring consistent and clear communication with investors and the Manager.

Reduce management expenses. In-house staff costs are traditionally the expense of the Manager, and carving out expenses related to fund-servicing proves challenging. Through a lift-out, costs related to fund administration are more clearly defined for expensing to the fund as appropriate. Best practices and operational efficiencies by the provider may also reduce the cost of administration.

Technology Best Practices.  The pace of technological advancement in the private equity space can be daunting and expensive without economies of scale.  A lift-out solution allows you to retain lifted-out staff’s institutional knowledge and relationships while gaining access to the latest technological tools and platforms of the service provider.

Address uncertainty. With most private fund manager firms running lean and fast, staff resignations and short-term leaves — combined with the difficulty of hiring during the pandemic — elicit pain. Third-party providers integrate lifted-out staff with their staff, ensuring succession. Service providers are paid to have a deep and experienced bench. It’s their responsibility, no longer the Manager’s, to quicky and seamlessly fill resourcing gaps.

A Win for the Asset Manager


The reasons for a lift-out are numerous, as are the benefits. For example, when Manager’s partner with a leading administration firm, there is opportunity to leverage new technology tools and platforms, upgrading both the Manager and investor experience. Further, administrators are expected to stay current with best practices and regulatory requirements, alleviating substantial burden from the Manager’s leadership.

 Lift-Outs: Benefits for the Asset Manager


  • Accelerate change
  • Transition staff costs to a fund expense
  • Potential to reduce back-office costs
  • Continuity of services for investors
  • Retain lifted-out staff’s institutional knowledge and relationships
  • Access latest technology tools and platforms
  • Access best practices and regulatory updates
  • Provide career opportunities for staff

 A Win for the Lifted-Out Staff


Rather than being laid off as part of an outsourcing strategy, the lifted-out staff join an established fund administration firm, accessing a wide array of career opportunities. Third-party providers have a large variety of accounting, finance, operational and technology roles to consider for future advancement. The lifted-out team becomes part of a firm where their skills are considered core to the business.

 Lift-Outs: Benefits for the Lifted-Out Team


  • Career opportunities within and across departments
  • Access to training in best practices and regulatory requirements
  • Job satisfaction from being a core function provider
  • Retain relationships with the Manager and Manager’s investors
  • Diversify experience through servicing other Managers
  • Upgrade skills by accessing the latest technology tools and platforms


A Win for the Third-Party Provider


The last win goes to the third-party lift-out firm. The provider gains a new client and new staff simultaneously. The new staff bring multiple benefits to the provider.

 Lift-Outs: Benefits for the Third-Party Provider


  • Gain a client
  • Add experienced and proven staff to the team
  • Deepen the bench
  • Leverage staff to work with additional clients
  • Potential to diversify the team

What to Look for in a Lift-Out Partner


It goes without saying that your lift-out partner must be deeply experienced in fund administration with a proven track record of customized client service in the alternative asset management space. But beyond that, there are softer criteria to assess.

Evaluate Prospective Lift-Out Partners

  • Is the partner excited to add your team to their deep bench of experienced staff?
  • Does the partner invest in people through professional development and career opportunities?
  • Does the partner have a culture of relentless improvement, supporting the evolution of processes to meet changing client needs?
  • Is the partner interested in a long-term relationship, not a quick transaction?
  • Does the partner have resources dedicated to managing the transition, relieving you of the project management burden?


Final Thoughts


We believe a lift-out provides an excellent alternative for a private fund manager seeking to outsource back-office functions without laying off existing staff. A lift-out solution not only avoids layoffs, but provides specific, tangible benefits for both the Manager and the lifted-out operations team. As a fund administrator, we benefit too, as we add experienced and qualified members to the Ultimus LeverPoint team.

There are a myriad of compelling reasons to consider partnering with a reliable fund administrator to provide a lift-out plan and outsourced services. If you are in a position to consider, or want to proceed with a lift-out, let’s connect. Ultimus LeverPoint has extensive knowledge about performing lift-outs and will be happy to put a project plan together that is customized to your unique circumstance.



12832976  05/17/2021


Understanding the risks and rewards of a SPAC

What your company should know about the IPO alternative.


Grant Thornton published the below blog article on March 5, 2021. Sean Denham, Partner, National SPAC Leader, Grant Thornton and Jason Pizza, Partner; National SPAC Advisory Services Leader,  The original blog post can be viewed here:

A special purpose acquisition company, or SPAC, presents opportunities for private companies to go public, usually without the heavy lifting associated with an IPO and with less dilution that leads to higher valuation.

A SPAC works by raising capital to join with a private company and then go public. Once publicly listed, the funds raised remain in a trust while the SPAC looks for acquisition targets — usually, a private company. Management generally has two years to identify a target company. Once a SPAC identifies an acquisition target and completes the deal, the SPAC no longer exists, and the newly joined company trades under a new ticker symbol. If they make no acquisition during the two years, the trust dissolves and investment money returns to the investors.

Discussion items


The four points below provide additional considerations and questions to discuss with management if a SPAC might be in the cards for your company:

  1. Due diligence. You will need to hold an organizational meeting, perform due diligence and develop data room protocols. You will also need to arrange for vendors to perform buy-side financial and operational diligence and assess the results of normalized financial operations or other diligence results with the investment committee.
  2. Structuring the deal. How much equity (or debt) will be purchased or deployed? How will the consideration be structured (i.e., cash, debt or equity)? Who will retain control of company? You will need to structure any earn-outs, communicate to public (i.e., Form 8-K), obtain shareholder approval and select investment advisors such as bankers and lawyers to facilitate structuring of the deal.
  3. Target readiness. You will need to be certain that all financial statements and operations are ready for scrutiny. This would include corporate governance/Sarbanes-Oxley requirements, general financial reporting, and tax, human resources and IT issues. Identify remediation areas prior to integration with the SPAC and subsequent public company reporting.
  4. Consummate the transaction. You will execute a merger or acquisition agreement, file form 8-K or any pro forma financial information as needed, analyze any business combinations and reporting issues, and file subsequent Forms 10-K and 10-Q with appropriate disclosure of acquisition.

There are a significant number of factors to weigh in determining whether a SPAC is the best avenue for your company, so be sure you’ve looked at every angle. You can learn more about SPACs by viewing our webcast SPAC: What you need to know about the quick alternative to IPO or contact us with questions.

For more SPAC insights from Grant Thornton, visit  SPAC Hot Topics Webcasts.

Originally posted on:



12850880  05/18/2021

SPAC Primer. Workings and Terminology.

SPACs, also known as blank check companies, are not a new concept; they have been around for more than 30 years. However, 2020 was a record year for SPACs in the U.S., and 2021 is continuing on that path. Per SPACInsider (, SPAC IPOs in the U.S. raised almost twice as much in 2020 as they raised in the previous 10 years combined. SPAC gross proceeds for the first four months of 2021 alone have exceeded that of calendar year 2020. Through April 2021, SPACs have raised more than $100 billion in gross proceeds, compared to $83.3 billion in 2020, and $13.6 billion in 2019.

With the frenzy around SPACs, the fear of missing out may be accompanied by a fear of not knowing (about SPACs), but being too afraid to ask. This blog provides the basics: what is a SPAC, how do SPACs work and why are they so popular.

What is a SPAC, in Brief?


A SPAC, or Special Purpose Acquisition Company, provides an alternative route—versus the traditional IPO market—for privately held companies to go public.

A SPAC is a company with no commercial operations. Its sole purpose is to raise capital through an initial public offering to merge with or acquire one or more existing private companies.

Capital raised by the SPAC is kept in an interest-bearing trust account. SPACs typically have about two years to make an acquisition, which must be approved by shareholders. If they are unable to complete a deal, money is returned to investors.

Once a SPAC is approved, the private company goes public with a new ticker; the SPAC no longer exists.

Terms to Know

SPAC A Special Purpose Acquisition Company. The sole purpose of a SPAC is to raise capital through an initial public offering (IPO) to merge with or acquire one or more existing private companies. A SPAC is a company with no commercial operations.
Sponsor The entity that forms the SPAC and funds the offering expenses in exchange for SPAC founder shares, commonly 20%.
Acquisition target The privately held company that is being considered by the SPAC Sponsor and must be approved by SPAC shareholders.
Business combination Once the acquisition target has been identified and vetted, a business combination is announced then voted upon by SPAC shareholders.
Blank check company SPACs are often referred to as blank check companies because SPAC IPOs seek to raise capital to purchase or merge with a yet-to-be-determined private company.
De-SPACing Once the business combination is complete, the SPAC no longer exists. The process is called “de-SPACing”.
SPAC units SPAC units are offered at the time of the IPO. A unit consists of a share of common stock and a (portion of a) warrant. Beginning approximately 50 days after IPO, the common stock and warrants may be bought and sold separately.
Warrant A warrant gives the holder the right to purchase a specific number of shares of common stock at a specific price during a specific time.
Trust account Cash raised by a SPAC is held in a trust account, and generally invested in U.S. government securities or money market securities, until a business is acquired, or the SPAC is liquidated without an acquisition and the money is returned to investors.


 How Does a SPAC Work?


We describe and illustrate the SPAC process in 5 steps.

Step 1: SPAC IPO.

The Sponsor forms the SPAC and funds the operating expenses. The initial offering of SPAC units takes place through an IPO. SPAC units shares are generally issued for $10/share, inclusive of a common share and warrant (or portion of a warrant). After the IPO, SPAC units trade in the open market. Approximately 50 days post-IPO, common shares and warrants may be bought and sold separately in the open market.

Capital raised by the SPAC is placed in an interest-bearing trust account until a deal is solidified or the SPAC is dissolved.

Step 2: Search for acquisition target.

The Sponsor seeks out and evaluates acquisition targets.

Step 3: Business combination announcement.

The Sponsor announces a business combination following initial due diligence on the acquisition target company.

Step 4: Vote on business combination.

SPAC shareholders typically vote on the business combination. There are three potential outcomes from this phase. One: Shareholders approve and there follows a review and commenting period by the SEC. Two: Shareholders withhold approval, and the Sponsor seeks another acquisition target. Three: Shareholders withhold approval, and the Sponsor liquidates the trust to redeem shares sold in the IPO.

Note that acquisition targets are usually valued at 2-4 times the value of the IPO proceeds. The additional funding needed to finance a merger or acquisition is usually made through debt financing or PIPE (private investment in public equity) deals offered to institutional investors before the merger or acquisition is announced to the public.

Step 5: De-SPACing, repayment, liquidation.

Once the business combination is complete, the SPAC no longer exists. This is referred to as the de-SPACing process. The newly established public company trades under a new ticker symbol. Investors who don’t wish to invest in the new company may redeem their shares. If the SPAC doesn’t make an acquisition during the stated period, the SPAC dissolves, investment money is returned to the investors and the warrants expire worthless.

Timeline: 18-24 months from IPO to Business Combination

Popularity of SPACs


The popularity of SPACs can be viewed through the lens of three parties: investors, acquisition companies and Sponsors.

Benefits to investors. SPACs give investors access to private-equity-like investments through experienced managers (the SPAC Sponsors).

Downside mitigation. Net proceeds from the IPO are placed into a trust account that accumulates interest.

Investors are guaranteed to get their money back if they do not approve the merger/acquisition within the stated time frame. Further, investors have a right to redeem their shares prior to a merger/acquisition.

Upside potential. Investors have potential upside through stock appreciation and warrant value.

Benefits to acquisition targets. SPACs provide numerous benefits for acquisition companies.

Faster, cheaper. SPACs allow private companies to go public through a process that is typically faster and cheaper than the traditional IPO route, which could take up to two years and cost 10% of IPO proceeds. SPACs often require three to five months until IPO and the costs are lower.

Control. The pandemic has caused the traditional IPO market to be more volatile and uncertain, leading companies to pull their offerings. A merger with a SPAC gives a private company more control and certainty, at a lower cost. Target companies lock in a stock price with the SPAC Sponsor, protecting against market uncertainty.

Access. SPACs provide access to experienced managers and a wider range of capital.

Benefits to Sponsors. SPACs provide attractive economics for Sponsors if a target is secured and shareholders approve. Sponsors typically reap a 20% equity promote (through founder shares) and private placement warrants. Further, SPACs allow Sponsors to focus on one material acquisition.

Final Thoughts


Ultimus LeverPoint offers full accounting and bookkeeping services for SPAC and Sponsors as they are launching the SPAC, during the life of the SPAC, and prior to the de-SPACing process. Services include: 1) preparation of financial statements and footnotes for SEC filing requirements; 2) monthly bookkeeping of the SPAC; 3) maintenance of the shareholder registry; and 4) Treasury services. By leveraging Ultimus staff, Sponsors are relieved of SPAC-related management duties, while accessing industry best practices and accounting platforms. Learn more here, Ultimus LeverPoint SPAC Services


12759267 05/04/2021


Data Privacy Concerns in Private Equity

Craig J. Cox, Member, Frost Brown Todd & Daniel A. Murray, Managing Associate, Frost Brown Todd, published the below blog article on March 1, 2020. The original blog post can be viewed here

Privacy, data security and data ownership issues are increasingly relevant for buyers in M&A transactions. This may result from the industry involved, the importance of data as a company asset, the use of data in the company’s marketing and sales, or because the company’s operations involve regulated data. Applicable laws include GDPR in Europe, CCPA for California, HIPAA for the United States, and PIPEDA for Canada.

Data issues should be a primary concern for buyers, both when conducting due diligence into a target company and when documenting the sale with appropriate representations and warranties and indemnity provisions. Failure to properly address these issues in an acquisition could subject the buyer to private causes of action from customers and other individuals and to action from regulators.

Due Diligence Concerns


Disclosure requests should address several key areas. Buyers need to understand a target’s treatment of regulated data such as health data, financial data, customer personal data, and data related to minors. Buyers should learn how companies interact with both customers and vendors.


Contracts with Data Subjects

Buyers need to understand a company’s privacy policies and contractual obligations related to customers. What kind of consent has been obtained from customers? Does the consent cover the types of activities that the buyer will engage in? The results of these analyses may impact the valuation of any deal. Remember, even if customer data isn’t at issue, data privacy laws may apply to employee data.

Post-acquisition, buyers may need to provide notification to, or obtain additional consents from, data subjects. Note what laws apply and what further consent is needed. If the acquisition is confidential, consent from customers will have to wait until the deal is completed.


Contracts with Vendors

Also relevant are contracts with suppliers that may collect or store data on behalf of the company, as well as any contracts the company may have to collect, process or store customer data for. Buyers should investigate a target’s security procedures and history of breaches. Does the company use third parties to perform security or vulnerability assessments or data audits? How does the company manage its network and data? Remember that one vendor is the data room provider. The parties will want to ensure that the data room provider complies with applicable law. Certain data may need to be protected from disclosure during the acquisition process. Pseudonymization or anonymization of personal data may be necessary.


Reps & Warranties

Representations and warranties can determine the target’s compliance and track record under applicable laws. This includes having the target confirm that they have established policies to comply with applicable data privacy and security laws and best practices. Also, confirm any security breaches, audits, or governmental investigations relating to data privacy and security that involve the target. Buyers should require the target to identify every jurisdiction for which the target possesses protected data.



Do your best to apportion risk of data privacy non-compliance. However, some laws, such as GDPR, may limit the extent to which apportionment can remove risk to either party. Seek appropriate insurance coverage when possible.


Originally posted on:


12679527  04/20/2021


Private Funds: Be Prepared for Evolving Regulations

Historically, the reduced compliance burden associated with private funds was a key advantage over registered funds. However, with recent changes in the regulatory environment, compliance for private funds is no longer a “check-the-box” item.

Private fund investment managers must be able to respond swiftly to new regulations while also ensuring their procedures are sufficiently flexible to accommodate evolution. Keeping current with changing regulations is time consuming; understanding the requirements of various jurisdictions can be complex. Managers often find their administrators and legal counsel to be invaluable for assistance with in depth compliance issues, allowing managers to stayed focused on investment management.

As the industry continues to evolve — whether through cryptocurrencies, foreign feeder structures, SPACs or otherwise — new compliance issues have arisen with greater frequency. In this article, we flag changes and trends in anti-money laundering (AML) requirements and expanded privacy regulations that directly impact private fund managers.

Anti-Money Laundering Requirements

Shifting Ground in U.S. AML Requirements

Traditionally, the U.S. has enforced light AML requirements compared to non-U.S. jurisdictions where private funds are often registered. But the passage of the Anti-Money Laundering Act of 2020 signaled a renewed attention to strengthening AML legislation. This was the first amendment of the Bank Secrecy Act in 20 years.

A potential revival of a FinCEN rule by the Biden administration, which would require investment advisors to maintain more formalized AML policies, is currently under discussion. We are watching this development closely.

Heightened Scrutiny for Cayman Islands AML

Offshore jurisdictions are similarly facing significant changes in AML legislation. For example, the 2018 revision to the Cayman Islands’ AML Regulations required, among other things: i) a risk-based approach to assessing customer eligibility and ii) the implementation of formalized AML Officer requirements.

Even substantial updates such as this one in 2018 continue to evolve. In 2020, the regulations were modified to remove the Equivalent Jurisdictions Regime, which had allowed simplified customer due diligence for specific countries. The modification requires private funds to conduct their own risk assessments on investors’ domiciles.

Heightened Scrutiny May be Accompanied by Fines

Beyond specific updates to the Cayman Island rules, there is also renewed focus on the Administrative Fines Regime. The Cayman Islands Monetary Authority has increased the rate at which it imposes fines on private fund managers and service providers for failure to implement effective AML protocols.

Furthermore, the Financial Action Task Force (FATF) recently added the Cayman Islands to the FATF gray list for enhanced monitoring due to their determination that Cayman Islands is not thoroughly enforcing its AML requirements. Fund managers can expect Cayman authorities to place a greater emphasis on testing and enforcement of AML rules in order to maintain its reputation as an international financial center.

Privacy Regulations


The past few years have also seen a substantial increase in the implementation of privacy regulations globally. Unlike AML rules, which tend to be jurisdiction-specific, customer privacy legislation generally applies to any entity that holds data on an individual resident in a location that has privacy laws.

GDPR Started the Privacy Regulation Trend

With the growth in privacy regulations driven by the General Data Protection Regulation (GDPR) in the European Union (EU) and the continued state-specific privacy regulations being implemented in the U.S., managers must take a broad and accommodating approach to ensure their privacy policies are easily adaptable.

GDPR, which was implemented in 2018, served as the driver of the current push for privacy regulation. While many managers had existing privacy policies, GDPR required anyone who maintained data on EU residents to be far more deliberate about the information collected, and to form definitive response plans for data breaches or requests from data subjects who wished to have their information deleted.

Impact Beyond the European Union

GDPR kickstarted the trend for privacy legislation in other jurisdictions. The Cayman Islands passed a privacy law in 2019, and Switzerland implemented its own law at the end of 2020. While both laws are similar in function to GDPR, they each have their own nuances.

The U.S. faces a complex array of privacy regulations, with individual states continuing to pass their own laws. The California Consumer Privacy Act went into effect January 2020, and Virginia passed similar legislation in 2021. While privacy laws on this level have been passed in only two states, similar laws are being discussed in many other states, signaling a growing desire to address privacy concerns regardless of state or domicile.

Given the continued momentum of privacy regulations, managers must not only address the regulations applicable to the domiciles of their investor base, but also plan for similar privacy legislation to come into effect in other jurisdictions.

Final Thoughts


Evolving regulations and increased complexity have made compliance for private funds far more challenging than in the past. It is crucial for private fund managers to have service providers who are true partners in their fund operations, who keep in front of regulation changes, and who enable funds to be prepared for compliance as soon as legislation is in effect.

Ultimus LeverPoint Private Fund Solutions is committed to keeping regulatory compliance a top priority. We stay on top of changing regulations so that our clients and their investors are not caught off-guard. In true partner fashion, we help reduce the administrative burden of meeting regulatory updates, allowing fund managers to focus their full efforts on optimizing investments and growth, as well as investor relationships.


12602699  03/06/2021


Opportunity in Disruption – Rethinking Private Equity Management Company Models

Many Private Equity and Venture fund managers continue to capitalize on market events by raising additional – and often larger – funds. Forward-looking firms in this situation may recognize that more or larger funds bring increased operational volume and complexity, along with extra operating expenses. While this may be considered a “quality” problem, it is, nonetheless, worth pondering the operational aspects and the beneficial outsourcing options that can help with growth.

Addressing Rapid Growth


Management companies are tasked with keeping the investment management business running. As such, managers may want to think proactively about how their growth spurt will impact the management company’s ability to adequately control its operational needs.

Responsibilities of a management company are broad:

  • Hire and pay employees
  • Engage vendors, oversee the relationships, and pay expenses
  • Bill portfolio companies
  • Track and monitor accounts receivable
  • Handle regulatory reporting obligations
  • Pay ongoing operating expenses
  • Oversee the fund and fund-related expenses

Disruptions due to the pandemic have prompted creative thinking for accomplishing core operating functions: remote working arrangements, remote due diligence and videoconference annual investor meetings. This inspired thinking has prompted investment managers to consider how to gain efficiencies and scalability not only in their fund management responsibilities but also their underlying management company operations.

Outsourcing: As Relevant for Management Company Operations as for Fund Operations


Outsourcing reduces the resources needed to support an in-house accounting team and allows fund managers to focus on their core business. Management companies can opportunistically engage a service provider to handle day-to-day non-fund accounting functions. Service providers deliver flexibility by offering a full scope of support or ad hoc services. For example, providers can:

  • Maintain the general ledger
  • Process account payables, accounts receivable, travel and expenses
  • Prepare journal entries
  • Bill portfolio companies
  • Process payroll
  • Provide weekly cash reporting and monthly bank reconciliations
  • Prepare financial statements
  • Provide an independent review of all outgoing payments
  • Perform vendor callback verification and maintenance
  • Allocate expenses
  • Prepare and file 1099 reports

Benefits of Outsourcing


At Ultimus LeverPoint, we’ve seen fund managers benefit in significant ways by outsourcing all or some of their management company operations. Your firm size, fund complexity, and level of in-house resources will drive your specific requirements.  One of the most important benefits to outsourcing is that it allows fund managers to focus on their core business.

Staffing Benefits for General Partners

  • Reduced resources needed to support an in-house accounting team
  • Ability to quickly and effectively scale
  • Access to skilled, qualified accountants familiar with the private markets industry
  • Redirected focus on core competencies rather than accounting

Process Benefits for General Partners

  • Immediate access to operational best practices and established standard operating procedures
  • Burnished reputation through using an SOC1-compliant provider
  • Independent Treasury review for all cash movements
  • Ability to obtain synergies by outsourcing management company administration and fund administration to the same entity
    • Enhanced communication, transparency and efficiencies between accounting teams
    • Ability to perform management fee reconciliations, discuss fund-level activities and offer a secondary level of review of expense allocations to the various funds and investments
    • Reduced involvement from fund managers
    • More accurate accounting records on both the fund and management company

Technology Benefits for General Partners

  • Immediate access to best-in-class technology plus streamlined, automated processes
  • Access to multiple accounting platforms (depending on the provider), such as QuickBooks or NetSuite
  • Access to accounts payable processing software to minimize human-error risk

Models for Outsourcing


As with most things, one size does not fit all. A management company’s size, complexity and in-house resources influence the optimal outsourcing model, from co-sourcing to partial outsourcing to full outsourcing.

Co-source – With the co-sourcing model, service providers work within the management company’s infrastructure, using their technology, processes and procedures. The important benefit: alleviating or postponing the manager’s need to hire additional employees.

Partial outsource – Management companies can choose specific tasks to outsource. For instance, outsourcing payroll adds a layer of confidentiality by limiting visibility of firm compensation. Outsourcing simultaneously reduces the workload on in-house resources.

Full outsource – Management companies can choose a turn-key solution to outsource the full range of operational responsibilities to an external provider. The firms benefit from proven expertise and technology supported by a rigorous control environment.

If your firm is experiencing exponential growth, or anticipates doing so, and you want to gain more insights into the benefits of outsourcing your management company functions, consult with a trusted service provider. At Ultimus LeverPoint, we have performed management company services for over a decade and offer a full suite of management company administration solutions. Our team works in a consultative manner with private equity CFOs, Controllers, and General Partners to implement the best operating model for each firm to ensure that your objectives and priorities are addressed. We’d be delighted to discuss your particular situation and help determine the best outsourcing model to fit your needs in order for you reap the most benefits.


12373475  03/08/2021


Alternative Fund Administration Trends Accelerated by the Pandemic and Work-from-Home Environment

One side effect of the COVID-19 pandemic has been to accelerate the adoption of nascent processes and technology. We’ve seen a transformation across industries, whether it’s the surge in online grocery shopping or the expansion of for-pay movie channels.

COVID-19 has similarly accelerated trends in the private fund world, as most firms, including Ultimus LeverPoint, moved to a remote working environment. We’ll assess three trends and their impact.

  1. Increased adoption of outsourced staffing by fund managers
  2. Improved communication and collaboration through Zoom and Microsoft Teams
  3. Increased emphasis and reliance on technology-based solutions

Outsourced Staffing as a Silver Bullet.

Fund managers have long used an outsourced staffing model to assist with fund administration. Some managers co-source while others fully outsource the functions. Still other managers have a fund administrator “lift out” their in-house administration staff.

At Ultimus LeverPoint, we’ve seen how the pandemic, coupled with the work-from-home environment, has accelerated the move to outsource fund administration, with staff illnesses and care-giving responsibilities added to the standard list of outsourcing drivers: resignations, maternity/paternity leave and a desire to shift administration costs to the fund.

We believe managers like the flexibility afforded by outsourcing, which allows them to avoid — or at least postpone — hiring and training replacements in a remote work environment.

Well-staffed fund administrators have the necessary skills and resources to perform outsourced services and be effective “Day 1.” We’ve found the most-commonly outsourced functions to include fund administration and management company services.

Outsourcing examples.

GP 1: The Assistant Controller of a private equity fund manager resigned in the middle of the pandemic. The manager was reluctant to hire and train a replacement in the remote environment. Instead, the manager chose to outsource the functions to Ultimus LeverPoint. Ultimus immediately assumed many of the Assistant Controller’s responsibilities, alleviating the burden on the fund manager.

GP 2:  A fund manager’s Vice President, Fund Accounting took a short-term leave of absence during the work-from-home environment. Knowing that the need was short-lived, the fund manager sought temporary assistance from a provider who required little-to-no training. At Ultimus LeverPoint, we were able to offer an experienced resource to work remotely with the manager’s internal team and step into the Vice President’s role. This short-term secondment offered tremendous benefit to the fund manager.

Videoconferencing is Here to Stay.

It is strange to remember that prior to widespread remote working, few of us were regular users of Zoom or Microsoft Teams. When it came to providing fund administration services to our clients, we did what most administrators did: we spoke with clients by phone, exchanged emails and periodically engaged in person. Fund administration was accepted as a service intended to be provided “remotely” to clients.

Yet with the accelerated, large-scale adoption of videoconferencing, we’ve found that our client relationships have become stronger. The use of video has allowed for high-value face-to-face interactions without the expense of travel. The ability to share screens has proven invaluable to resolve issues, while simultaneously enhancing relationships through more effective communication and collaboration.

Videoconferencing examples.

GP 3: Remote client onboarding.

During the work-from-home environment, Ultimus LeverPoint switched to Microsoft Teams to onboard clients. Our recent onboarding of a West Coast client eliminated travel, allowed for a faster, more efficient process and accelerated relationship building. The result: greater synergy between Ultimus LeverPoint and the client from the onset.

GP 4: Problem resolution via Teams.

In the remote work environment, we — like many around the world — have used the “share screen” function within Microsoft Teams to great effect. Our ability to walk through Excel workbooks on screen has resulted in more positive interactions and faster resolution times.

At Ultimus LeverPoint, we don’t envision a time when we’ll revert to the now-outdated client service model of phone calls and emails alone.


Faster Adoption of Technology.

The work-from-home environment has precipitated the adoption of various technologies by fund administrators, private fund managers and fund limited partners. Secure, desk-top and mobile-friendly solutions have become the norm.

Technology adoption examples.

GDPR-compliant electronic document signing.
Electronic document signing has been available for years. But the pandemic accelerated its use.  Limited partners and general partners can sign agreements from most locations using desk-top or mobile devices. As important, electronic document signing-technology routes documents, data, and signatures through back-end systems, accelerating approvals and moving assets. Scanners can go the way of the dinosaur.

Expanded portal capabilities.
Investor portals, too, have been used for many years, initially as a repository for documents and later as an interactive tool. But the trend now is toward greater transparency through on-demand reporting, and drill-down functionality. Fund managers want direct data feeds to enhance communications with investors and provide easy-to-use dynamic reporting.

Ultimus LeverPoint offers an enhanced client portal, through which fund managers and their investors directly access detailed fund and investor-level data and reporting on-demand.

All around us, we see how the pandemic and associated work-from-home environment has accelerated nascent trends. Within fund administration, specifically, we believe the remote work environment has hastened several positive movements that will have lasting impact. First, fund managers have seen the benefits of outsourcing administration-based tasks on a temporary or longer term basis. Second, the use of videoconferencing has enhanced, not harmed, relationships with clients. Third, technology has risen to fill the needs of fund managers and limited partners, no different than how apps have filled the need for online grocery shopping.

Learn more about how Ultimus LeverPoint can assist with your fund administration needs during the work-from-home environment and beyond.


12211007   02/18/2021


ILPA Guidance for Institutional Limited Partners…and the Implications for Private Markets Fund Managers

Institutional investors have long advocated for themselves with private markets fund managers, whether for reduced fees, increased transparency, custom reporting, or more favorable limited partnership agreements, to name a few. But this highly fragmented approach has proven inefficient — and undoubtedly frustrating — for LPs and GPs alike.

What is ILPA?

The Institutional Limited Partners Association, better known as ILPA, stepped in to unify the voices of institutional LPs, bringing them together for education, resources, and networking purposes, while providing cohesive guidance and best practices to advance LPs’ interests. ILPA publishes a variety of industry guidance for LPs and GPs, including Principles 3.0, model LPAs and fund reporting templates.

ILPA’s member entities include public and private pensions, endowments, foundations, family offices, insurance companies, sovereign wealth funds and other institutional investors. In aggregate, allocations from ILPA’s 500+ global institutions comprise about 50% of capital invested with private equity fund managers. ILPA’s members include over 5,000 professionals in 50+ countries.

Clearly ILPA’s membership represents a powerful voice. As such, private markets fund managers should be aware of — and prepared to follow — ILPA’s guiding principles for alignment of interest, governance and transparency.


What Institutional LPs Seek…and How GPs Can Prepare

In this introductory blog, we share ILPA’s guidance for what LPs seek and GPs should know in three areas related to fund administration:

  1. Detailed financial reporting
  2. Operational transparency
  3. Independence and governance


ILPA guidance for detailed financial reporting

One of ILPA’s foremost goals is to promote transparency and alignment of interests between LPs and GPs. ILPA also advocates for uniformity in disclosures to LPs.

In 2015, ILPA surveyed its members and found that more than half of the institutions had developed custom templates to capture fee and expense information beyond that provided in standard GP reporting packages. In response, ILPA launched an initiative to establish more robust guidelines for fee and expense reporting and compliance disclosures.

ILPA packaged the standardized guidelines in financial reporting templates, enhancing the templates and adding new ones over time. LPs benefit from increased transparency and consistent information across fund managers. GPs benefit from being able to provide standardized reports following the ILPA templates, thereby reducing the need for custom LP reports. A sampling of these standardized reporting templates includes:

  • Capital activity template: detailed capital call and distribution schedules
  • Fee income template: detailed schedule with fees, expenses, carried interest and reimbursements
  • Portfolio company template: details about each company, including invested capital and performance


ILPA guidance for operational transparency

In 2017, ILPA issued guidance for greater disclosures and clarity in partnership agreements regarding subscription lines of credit. But with inconsistencies remaining, ILPA in 2020 released additional guidance for quarterly and annual disclosures to provide LPs the necessary visibility to monitor the impact of subscription lines on both exposure and performance.

Levered and unlevered metrics. Because leverage is utilized by some managers, but not all, it is difficult to compare fund metrics across the industry. ILPA therefore provides specific guidance that fund managers report unlevered return metrics in addition to any levered metrics.

The following excerpt from ILPA guidance illustrates the effect on performance data of delaying the first capital call — by using a subscription line of credit.[1]

Year Transaction Type Cash Flows
(without line of credit)
Cash Flows
(with 1-year line of credit)
Cash Flows
(with 2-year line of credit)
1 Investment -100
Management Fees -2
2 Investment -100
Interest -4
Management Fees -2 -4
3 Investment -100
Interest -8
Management Fees -2 -2 -2
4 Management Fees -2 -2 -2
5 Management Fees -2 -2 -2
6 Management Fees -2 -2 -2
Realization 162 162 162
  IRR 6.62% 7.14% 7.98%
  TVPI 1.45x 1.40x 1.35x


Terms and costs of the line of credit. Lines of credit also impact investors’ cash management strategies, as required paydowns may lead to large, unexpected accumulated capital calls. To address this liquidity risk, ILPA also released guidance for transparency into the key terms and costs associated with subscription lines of credit.


ILPA guidance for independence and governance

Investors — specifically institutional investors — seek a layer of independence and governance at the fund manager when it comes to the reporting structure. Fund administrators provide this additional layer of independence, as well as reporting and operational guidance, to ensure investor reporting and economics are in line with governing documents.

Institutional investors know that fund managers who’ve incorporated ILPA best practices for reporting, including ILPA templates and performance metrics, are following the industry “gold standard.”


How Fund Administrators Assist with the Implementation of ILPA Best Practices

Implementing ILPA’s reporting templates can be complex, but the benefits are clear-cut for both investors and fund managers. By outsourcing fund administration, GPs can minimize the cost and effort of satisfying institutional investors’ ILPA reporting requirements.

Fund administrators have the software solutions and technology to automate ILPA templates across a manager’s LP base. Fund administrators also have extensive in-house experience with ILPA-recommended reporting standards and performance metrics. Plus, as noted above, institutional investors favor the independence of third-party fund administration over in-house solutions.

ILPA empowers institutional limited partners through a unified voice and standardized approach for requesting transparency and disclosures from private markets fund managers.

At Ultimus LeverPoint, we see first-hand the influence of ILPA guidelines on institutional investor requests. Fund managers increasingly are being asked to follow ILPA recommendations, specifically with respect to fund reporting. ILPA’s reporting guidance minimizes the need for custom investor reports. That’s a win-win for GPs and LPs alike.


11831725   01/12/2021


[1] ILPA website download: 2020 Guidance – Enhancing Transparency Around Subscription Lines of Credit