Full suite systems becoming industry norm

Nearly half (41 percent) of GPs now integrate traditional back office systems with their front office work, according to Corgentum Consulting’s in-house database seen exclusively by PE Manager. 

Larger private equity firms in particular (those managing $1 billion or more) are incorporating investor relations, portfolio company information sharing and other front office work with back office functions like reconciliation, settlements and fund accounting. Two-thirds of large GPs have a full suite system in place, according to Corgentum, which helps LPs inspect GPs’ fund administration systems. 

In comparison “middle office systems” are used by 32 percent of GPs, according to Corgentum. Middle office systems feature functions that bridge the gap between the front and back office, including risk management and reporting, record maintenance, compliance oversight and information technology management. 

The remainder of firms within the database (27 percent) have systems which are solely focused on traditional back office functions, the data revealed. 

Jason Scharfman, a managing partner at Corgentum, noted that there is more of a disparity among the fund administration systems chosen by smaller GPs. In comparison 41 percent of larger GPs now use one of eight fund accounting systems as compared to 36 percent one year earlier. 

Scharfman added that 72 percent of larger GPs that have adopted a full suite system still have some legacy systems in place, often because the data from the prior system had not yet fully migrated to the new one. 

Be sure to check out our 2012 Fund Administration and Technology Compendium 2012 for more on this issue, and what specifically LPs expect of their fund managers' chosen systems.