Knox Lane’s Ivor van Esch discusses outsourcing to Gen II

Knox Lane is a relatively new firm. When did you join the team? 

I joined as head of finance in 2021, but Knox Lane had begun raising its first fund in 2019 with a team that had worked together for quite a long time at TPG Growth and its portfolio companies.

That debut fund closed at $610 million, with a focus on mid-market buyout investments in the consumer and services sectors. By 2022, I was made chief finance and compliance officer, my current role.

Was the firm already outsourcing its management company?

We were. The firm previously had one service provider responsible for management company administration and another for fund administration.

I soon realized, we might gain some real efficiencies if we used one service provider for both, so after a diligence process, we decided to transfer the management company finance work to Gen II, the firm that was handling our fund administration.

How was the onboarding process around moving the management company activities to Gen II? 

I have to say it was fairly smooth. We intentionally took a longer approach to transitioning, by having both firms still operate together and slowly transitioning the pieces over to the new Gen II team. The accounting system integration was probably the most cumbersome part of the process, but it was critical to get it right. I’d say it took us three to four months to complete, so basically a quarter. We simply didn’t want to risk any errors around historical records, mapping accounts and the systems involved.

Do you have advice for your peers as they look at outsourcing their management company? 

We’ve found this approach to work very well, especially given the new regulatory requirements from the US Securities and Exchange Commission. There’s just so much work to be done that we’re being very proactive in developing the process to make sure we’re ready when we need to be. Given the workload, outsourcing makes a lot of sense.

I’d be sensitive to team turnover at service providers because this model works best when it’s the same staff who know our needs and our individual processes. And I’d take a good hard look at the technological capabilities of that administrator. It’s vital to have a system that can evolve with industry’s demands. Six months ago, I added a new internal hire to be the key liaison with Gen II, because as much as they do for us, we still need to supervise that work and are responsible to our stakeholders for the data we deliver.