UK: Taking The Strain

Last Updated: 1 June 2017
Article by TMF Group

General partners are turning to outsourcing to cope with an increasingly complex set of regulatory and investor demands, says Bruno Bagnouls, global head of private equity and real estate at TMF Group.

Whether it is the demands for data to meet the latest regulatory initiative or a query from a limited partner seeking greater transparency, back offices are under unprecedented pressure. That coupled with the rising complexity in fund management has led growing numbers of general partners to look to externally source specialist services to fund administrators. TMF Group's Bruno Bagnouls explains how the landscape is shifting.

How is the outsourcing model changing for private equity firms?

Private equity firms are increasingly seeking more specific types of sourcing as a result of a number of trends. Firms are now being asked for additional and specific items of reporting at both a fund and special purpose vehicle level as LPs seek greater transparency from their GPs. For example, LPs now look for access to data, legal documents and information around decision-making in addition to financial reporting to ensure they can monitor their fund investments more closely from a governance point of view. They want to know more than ever before about decision-making processes both at fund and portfolio company levels. On top of this firms now operate in a much more complex regulatory environment than previously as initiatives such as FATCA, AIFMD and BEPS require the collection, disclosure and reporting of more specific information.

What does this mean for the back office?

Together these forces are leading private equity firms to reassess how they run their back offices – they need to work out whether they invest significantly in their in-house capability or whether they turn to external providers. With AIFMD in particular, the need for firms to hire a depositary means they are more likely to look to sourcing than they might have done previously. In addition, many firms that already use external services are looking to streamline. They don't have time to assess how different providers are working out across different service areas and jurisdictions and so they are seeking solutions that encompass all of their back office needs.

And what about complexity within the firms themselves?

There is no doubt that private equity businesses have become more complex. First, there is the maturity of the industry – as firms raise new capital, they simply have more funds and investments to report on. Yet we are also seeing increased demand from LPs for co-investment opportunities and separately managed accounts and these create additional vehicles that funds somehow have to administer. With the large, global players in particular there is a lot of demand for financial reporting services. Some of them will have 200 or more SPVs underneath the funds and they have to make sure that they are all compliant legally and in terms of reporting.

Sourcing can provide a way of managing risk and ensuring that the right information is provided to the right constituents in the right formats.

How is this increased complexity shaping the managed services models at providers such as TMF Group?

There are two main ways of building an operating model. One is a client-centric model whereby a provider builds teams around the client and the same team provides all services to the private equity house, including sitting on company boards. This can be a very convenient way of servicing a client and is sometimes favoured by smaller and mid-market private equity firms as they will have regular contact with team members and they can feel as though they have dedicated resources for their firm. However, the limit to this model is that, with increased complexity, there is a need for ever more specialist resources at the external service provider. Having specific teams dedicated to firms is not scalable cross multiple geographies, jurisdictions and areas of technical expertise – it also makes it harder for firms to streamline their sourcing to one provider. Larger firms increasingly require a more function-led organisation that can offer a whole range of back office services – and that's what we've adopted at TMF Group. This model allows you to have much more specialist teams that have expertise in, say, tax, complex accounting methods and the idea is to deliver these services across a number of jurisdictions according to where the client has operations or investments.

So how do you ensure that you can remain focused on the needs of the client with a functional, as opposed to client-centric, model?

The key to getting this right is to ensure you have a strong service delivery offering. That in part comes down to getting the client management contract right at the outset with the right service-level agreements and terms and conditions in place. Yet it's also down to having strong client service capabilities so that the needs of different can be met through tailored solutions, supported by a high level of co-ordination between the different teams. At TMF Group, for example, we are able to provide services for SPVs in individual countries, while we have fund administration teams based in Luxembourg and Singapore, with teams in different areas collaborating to provide seamless services to our clients. We believe that having local skills and specialist experts, combined with a highly structured approach to client service and strong IT platforms, means that we can help streamline private equity firms' back office operations.

You mentioned IT platforms. How are technological developments changing reporting and monitoring in private equity?

Technological developments are having a profound impact on reporting and access to information. With a central repository for all data, there is increased efficiency for private equity funds themselves as well as for LPs, who can access information when they need it and in a way that suits them. The quantum of information that can now be collected can also enhance risk management at fund and portfolio company levels – it's far easier to create dashboards, for example, to monitor progress against specific measures and highlight where things are not going to plan. Yet there is much more to come. We'll see more automation of high frequency, repetitive tasks, such as accounting, and that will enable us to spend more time with clients and focus on more specialist, low-frequency tasks. Of course, with these technological developments comes a need for greater standardisation of the way information is collected and provided if private equity firms are to gain maximum benefit from the potential for greater efficiency. That's clearly still a work in progress but we are looking at ways of integrating our platforms so that our clients can streamline their back office further. So, for example, we are working on the development of a global platform for legal entity administration.

How do you think external services for private equity firms will develop in the future?

We are very confident about the growth of these services for the private equity industry as firms increasingly recognise that fulfilling LP requests and regulatory requirements is a specialist area. Most firms would prefer to focus on their core areas of originating, investing in and growing great companies. Yet we also see that more work needs to be done on standardising the information provided to ensure the greater transparency that regulators and LPs are seeking from the industry.

Find out more about how we help drive efficiency for global clients.

This article was originally published in the June 2017 edition of Private Equity International.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions