In reaction to the covid-19 outbreak, the private equity industry has shifted from the office to online. Service providers that are sufficiently prepared for remote working are more or less operating as before, but the ‘new normal’ will likely pose significant disruption for firms without the necessary arrangements in place.
“This is a really trying and interesting time for our industry and it’s going to expose weakness in operations of organizations in the ecosystem, whether that’s a GP, an LP, or service providers,” said Ian Cameron, COO at Gen II Fund Services. “There will be some immediate remediation steps that must be taken by many organizations across the private equity industry.”
Business continuity plans are being stretched to the limit across industries, and service providers are no exception. But there are a few things to look for when assessing your providers strengths.
Berlin-headquartered law firm P+P Pöllath + Partners has offices across Germany and a large international client base, and already has much of the necessary infrastructure in place to allow all its staff to work remotely, according to partner Tarek Mardini. The firm often relies on phone and video conferencing rather than face-to-face meetings to communicate with international clients, meaning that its employees are well-practiced in providing counsel at a distance. Equally, the firm’s fully insourced IT team has proven to be an advantage as external IT providers experience increased demand from their other clients.
“Initially, it was a bit of a challenge, but our IT team is very capable, and they have succeeded in allowing the whole firm to work remotely,” said Mardini. “We don’t outsource anything – everything is done in-house, and we always rely on our own infrastructure.”
Outsourced firms that offer an entirely online or software-based service will likely experience a more seamless transition into remote working, thanks to an already low need for face-to-face interaction with clients.
“From our standpoint, nothing has really changed,” said Tom Pittman, managing director and CMO at EWM Global. The firm offers its compensation administration services through an entirely online platform – something that is providing some assurance for both the firm and its private equity clients.
“As you digitize these functions, they’re much easier to maintain – the platform doesn’t take a vacation,” said Pittman. “The system is always working, while the humans that interact with it are driving it, controlling it, but the system is doing the heavy lifting.”
Preparedness is key
“We recognized this threat early, so we took steps immediately to make sure that our business continuity plans were ready to implement,” said Gen II’s Cameron.
Gen II’s internal IT system is entirely cloud-based, which has allowed the firm to transition to remote working with relative ease, but it is the firm’s forward planning that has been key to mitigating disruption. “Some of the strategic decisions around our technology that were made several years ago have really helped us in this environment,” said Cameron. “Those systems have proven to be invaluable to us in this instance where we have had to move the bulk of our workforce, if not all of it, to a remote working situation.”