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Co-sourcing is one of the most exciting concepts in fund administration. This hybrid fund administration model blends the best aspects of the traditional fund administration models – outsourcing and insourcing – in order to create an approach that lets GPs leverage third-party fund administrator services without further complicating their data management workflows.
The result: GPs can work with fund administrators while still maintaining easy access to their back-office data, and fund administrators are opened up to new prospects and opportunities that would have previously been closed to them.
Technology sits at the center of this new administration arrangement. And consequently, to make co-sourcing work effectively for both parties, it is essential to implement the right technological solution.
As Jonathan Broch, Executive Director at Lionpoint Group, explained to us, the requirements of a technology solution to support co-sourcing are multi-faceted:
“To effectively support the co-sourcing model, the fund administration solution should not only deliver robust accounting capabilities but must also offer a granular security model to partition off access to certain entities, provide the proper oversight framework with four-eye reviews and approvals, and enable collaboration across parties regardless of location through a centralized cloud-based architecture.”
At Allvue, we wholeheartedly agree with Broch’s assessment and believe that our well-established, best-in-class software is uniquely positioned to satisfy these requirements. That’s why we’ve taken the lead in facilitating co-sourcing engagements in the private equity industry.
In this article, we breakdown why Allvue’s technology – offering a true general ledger that’s built on Microsoft specifically for the private markets – is ideally situated to execute co-sourcing arrangements.
The appeal of co-sourcing is that it allows for a single source of truth for data – rather than needing to duplicate efforts, sling Excel files back and forth across potentially unsecure servers, and open up opportunities for error through repeated manual entry, multiple parties can work off a single source of data.
This appeal, however, is significantly negated if data still has to be re-entered and duplicated across a fund’s lifecycle.
Allvue simplifies the data management process across the fund lifecycle by offering an end-to-end, fully-integrated platform that operates on a single source of data. This creates data consistency and control – meaningfully streamlining processes and workflows and creating confidence about data accuracy.
Because Allvue’s platform works off of a single source of data, it allows for real-time analysis of that data even by multiple stakeholders.
This allows for four-eyed maker-checker review of materials and processes, and it also allows the portfolio management team to run analysis of existing holdings while the fund administrator executes accounting and reporting.
Other technology vendors, limited by the structure of their system, will be forced to replicate data when creating a co-sourcing environment. But because Allvue operates off a single source of data and because we can easily integrate with existing authentication methods, allowing for multiple stakeholders to interact securely, Allvue is able to facilitate real-time access to and analysis of data.
Allvue’s software is based in the cloud – an essential component for a co-sourcing arrangement. By being cloud-based, we are able to grant easy access to our clients and their stakeholders anywhere in the world. Because of our global reach, GDPR compliance is built into our platform and we support accounting and reporting in a wide variety of countries so that you don’t need to worry about IFRS or GAAP coverage.
Being in the cloud also allows our platform to be more scalable for our users. It eliminates the need for costly IT maintenance so that you can get up and running quickly and grow without restraint.
Allvue’s Fund Accounting system has long been a best-in-class software solution in the private equity industry – for enterprise and emerging managers alike. Unlike competitors, our solution is a true general ledger, built specifically for the needs of the private capital industry.
Our platform provides:
Because our solution is able to ensure data accuracy and provide real-time access and analysis in a cloud-based, scalable, and secure platform, Allvue has been able to lead the industry in facilitating co-sourcing engagements.
We see co-sourcing as an essential component of fund administration models whose prevalence only seems set to grow in the years ahead. It’s a trend echoed by Jonathan Broch at Lionpoint:
“The co-sourcing model has gained significant traction in recent years as GPs recognize some of the limitations of traditional outsourced fund administration and are increasingly willing to invest early in the technology and data management infrastructure to support the long-term growth aspirations of the firm.” – Jonathan Broch, Executive Director, Lionpoint
To learn more about this transformative new relationship model, read our primer on “What is Co-Sourcing?”
And to learn how Allvue can help you streamline your back-office processes and facilitate your own co-sourcing arrangement, reach out today to schedule a demo.
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At Allvue, we’re committed to harnessing technology and expertise to tackle the biggest challenges facing the private capital space. Our Resources hub, offering blog articles, whitepapers, case studies, videos, and more, shares industry best practices and reflects the experience and learnings of top Allvue experts and our partners motivated to see this industry continue to grow and thrive.
Our goal is to provide guidance as well as food for thought for anyone interested in the private equity, venture capital, private debt, and public credit spaces – whether you’re learning the fundamentals or getting ready to raise your fifth fund. Many of our articles contain links to trusted third-party resources to support our takes, and all our content is regularly reviewed and updated to keep current with the fast pace of alternative investment innovation.