How Corsair Capital balances outsourcing with its internal staff

For more than a decade, Corsair Capital has outsourced the administration of both its management company and funds, so we sat down with CFO Paul Cabral to discuss how that approach has fared in the long term.

Any industry is prone to fads in best practices. But what might have been celebrated as a “common sense” tactic years ago can calcify into a tradition that can’t meet modern demands. That is why best practices should be regularly vetted to make sure they remain relevant.

Outsourcing management company administration is one trend in private markets that has been around for quite some time. The benefits it provides are certainly compelling, with the promise of cutting-edge tech, rigor and expertise. But what does that at practice look like after a decade or more? Here, Corsair Capital CFO Paul Cabral shares his firm’s experience outsourcing management company administration since 2009.

How has Corsair found its experience outsourcing both its management company and fund administration?

I joined Corsair back in 2017, and we’d already been using Gen II as an administrator of both the funds and the management company for years. I’ve worked with numerous administrators over my career, and when I arrived, the work was well handled, so there was no reason to do anything differently. I will say that over time, they’ve upgraded technology as it makes sense, but beyond that, not much has changed.

“Outsourcing allows us to stay efficient with our headcount, while letting us hire key people internally”

We’ve taken full advantage of their internal processes and controls, and of course, their additional bandwidth as needed. We try to empower them as much as we can, and I think that speaks to the trust that’s been built over time. All those years have also created a great informal communication dynamic, where we’re always in contact with one another and feel free picking up the phone or sending that email about anything that’s come up.

How do you view the role of internal staff when you’re outsourcing to Gen II?

As much as Gen II does for us, our internal staff is ultimately responsible for the work. Outsourcing allows us to stay efficient with our headcount, while letting us hire key people internally, which makes our whole organization stronger.

Any advice for a CFO exploring the possibility of outsourcing their management company?

I’d say it’s best to begin outsourcing when the firm is first starting. There’s just an enormous upside to tapping the industry expertise, the latest tech and the market intelligence. Service providers have multiple clients of different sizes, vintages and strategies, so they can share the best practices from all of them.