Braemont Capital on outsourcing from the get-go

Even before its first close, Braemont Capital outsourced the administration of its funds and its management company, says Steve Sims, the firm's COO and CCO.

Like most best practices in this industry, the ideal time to begin them is at the firm’s founding, and the second-best time is right now. Management company administration can be handled in-house when there’s only a couple of funds, but eventually, the work requires more staff, technology and rigor than GPs may care to spend on it. We asked Braemont Capital COO and CCO Steve Sims about the firm’s experience outsourcing management company administration from day one.

Why did Braemont Capital decide to outsource its management company administration from the very beginning?

The decision was rooted in the fact that our managing partner Robert Covington already had experience outsourcing the administration of both the funds and management company to Gen II.

Robert spun Braemont out from Redbird, another New York and Dallas-based private equity firm, and brought with him the best systems, processes and controls from that organization. But we’ve found our own value in working with an experienced service provider, and that’s because this is the first time I’ve served in this role at a private equity firm, and my controller is a CPA that has never worked in private equity before.

“My best advice about working with administrators is, make sure it’s a true partnership”

We rely on Gen II not merely as another set of hands, but as a trusted adviser, given their wide range of clients and experiences to help us make decisions about our own infrastructure. For example, we just introduced a new LP portal, and they were integral in sourcing the right technology and ensuring a successful transition.

Since Braemont decided to outsource, how did the firm look at in-house staffing?

Until December, I was by myself and that was hard. There’s still plenty to do internally with capital calls, subscription documents and the like, not to mention feeling that I really wanted a second pair of eyes on all our work. We tapped Carolyne Baber as a controller, since she was a CPA with extensive tax expertise that I didn’t have. She can tackle K-1s, expenses and a lot of the processes, and that’s been a tremendous help.

What advice do you have for other emerging managers who are looking to outsource the administration of both the management company and its funds?

First and foremost, establish a cadence for communication. We have weekly Thursday calls with Gen II, and that’s done so much to keep administration matters from being postponed or neglected. We have a working capital line and financial statements due at specific dates, so these weekly calls ensure those deadlines never surprise us. Sometimes we only talk for five minutes, but it keeps us updated.

My best advice about working with administrators is, make sure it’s a true partnership, with dialogue and real collaboration. We don’t merely make requests of Gen II; we work together to find out what we need and how best to get it.