Private Funds CFO: What exactly does ‘in-house operations’ mean?

Authored by: Robert Caporale, President, Strategic & Digital Solutions
Updated on: January 30, 2024

Why a Fund Administration Partner Gives you More Control - Not Less

Through our advanced technology, GPs get more visibility with Gen II

The rise of remote work enabled fund administrators to dispel the misconception that hiring them means a loss of control and oversight. Thanks to advanced technology, companies like Gen II enable private equity sponsors to leverage the capabilities and best practices of specialists while maintaining oversight and review over “back-office” tasks. 

The pandemic has forced this new reality, and GPs are starting to understand the benefits.

They realize that it’s more expensive and riskier to try to keep pace with ever-growing complexity themselves. Outsourcing fund administration tasks means fewer headaches while reducing the need to invest in — often costly — infrastructure.

In-house does not equate to control  

Large and established private equity firms typically built out back- and middle-office systems in the belief that a customized technology stack, managed by internal resources, offered the best way to exercise control over mission-critical workflows. 

Unfortunately, many of those who made these initial investments were under the impression they were one-time expenditures. And why not? Who could have predicted the current rate of technological advancement and rising talent costs? Nowadays, relatively new systems become obsolete rapidly as demands change. 

Additionally, all this new tech requires deep specialization that effectively mutes the previous competitive advantages of maintaining proprietary technology. 

For more on this topic, read Gen II’s Robert Caporale’s article in Private Funds CFO: What exactly does ‘in-house operations’ mean?

Published on: February 3, 2021