Outsourcing fund administration allows a PE firm to scale operations instantly. Launching a new fund is as simple as notifying the administrator, who already has the staff. This avoids the HR burdens, hiring delays, and capacity constraints an internal team faces, effectively acting as a cloud-based back office.
The most powerful testament to a fund administrator's value is when former employees "graduate" to start their own funds and then hire their old firm. This cycle, where a former employee becomes the client, demonstrates profound trust in the firm's quality, culture, and expertise developed over many years.
By aggregating data across numerous client funds, fund administrators gain a unique, ground-level view of market trends. Based on current fundraising struggles and cycles, Sontera predicts a strong resurgence in PE fundraising activity in Q4 2025 and Q1 2026 as market fatigue from the 2021-22 boom subsides.
First-time fund managers often try to differentiate with creative or complex terms. However, institutional investors prefer standard structures (like 2 and 20) because it allows them to quickly compare new offerings to established funds on a "like for like" basis. Uniqueness should come later, in a second or third fund.
PE firms frequently hire from fund administrators because their employees develop a uniquely broad skillset. Unlike specialists siloed in larger firms, fund admin professionals gain experience across accounting, legal documents, tax, and operations, making them ideal hires for lean PE back offices that need versatile talent.