Achieving Differentiated Support for Private Equity Firms

This article is taken from an interview with Adam Palmer, partner for UK regulatory compliance, with Private Equity Wire following our recent award win at the Private Equity Wire European Awards 2021, where ACA was named Best Regulatory & Compliance Firm.

Fundraising is expected to increase in the second half of 2021 into 2022 and as private
equity firms face challenges on various dimensions, support that blends practical and regulatory advice is becoming critical.

“Despite the early economic impact of the pandemic and the inevitable pressures felt by the PE industry both at a firm and portfolio company level, the industry has emerged relatively unscathed and appears well positioned as the global economies continue to rebound. We’ve already seen a sharp increase in deal-making as firms return to previously shelved transactions,” outlines Palmer.

With the historic lines between PE and other industries continuing to blur, ACA has blended its knowledge of market practices from across the financial sector (hedge funds, direct lending funds, securitisations, illiquid markets, public markets) to provide a service that covers all possibilities, while retaining a practical commercial approach for PE firms.

Palmer discusses the trends currently driving the private equity (PE) market: “We have seen an expansion of strategies due to early pandemic impact on the economy, such as quickly raised distressed/special situations funds or more targeted sector focused pools of capital. These expansions have led to a greater emphasis on conflicts of interest and MNPI considerations. 

“Firms have also expanded their universe of investment opportunities within existing strategies across the capital structure, in accordance with contractual obligations, to include loans and bonds which in turn bring their own information barrier considerations and reporting requirements.”

In addition, throughout 2020, PE firms carried out focused reviews of portfolio companies and their specific needs.

Palmer explains: “This requires consultants to dive deeper into the structures of investment vehicles providing a greater level of practical advice and support on governance issues across the portfolios rather than simply advising on the implementation of EU wide directives and regulations.”

ACA Group’s response has been to build a service offering that blends practical and regulatory advice, to take into account far more strategic and operational considerations. 

“This has, in turn, developed a more nuanced approach for our clients, incorporating firm specific processes while also adjusting for wider market trends and best practices as appropriate,” Palmer notes. 

And as the fundraising drive continues, ACA is positioned to support clients with its marketing review offering. This aims to take the time-consuming strain of reviewing multiple strategy and investment decks from in-house compliance teams via the firm’s managed services. 

PE firms also face numerous regulatory change challenges, namely new, prudential compliance rules and the transition away from LIBOR. In addition, Palmer says: “We also see some signs that regulators are, once again, casting a gaze across the entire private markets space and questions have been asked, albeit quietly, about the way individuals are selected when taking on board seats.

“Time will tell if this does actually signal the start of a deeper look at the market but with an emphasis on governance structures in the UK post the Senior Managers and Certification Regime, it cannot be discounted, and we are monitoring the situation closely.”

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On a winning streak

This award is one of seven that ACA’s European team have won so far in 2021, recognising the strength of the team's governance, risk and compliance advisory services, cyber, RegTech solutions and regulatory hosting offerings. 

1. HFM European Services Awards: Best Advisory Firm – Overall - ACA Group
2. Private Equity Wire European Awards – Best Regulatory & Compliance Firm – ACA Group
3. HFM European Tech Awards: Best Regulatory Reporting Solution – ACA’s ARRMA
4. HedgeWeek European Awards 2021- Best Regulatory Hosting Platform – ACA Mirabella
5. HFM European Services Awards – Best Regulatory Hosting Solution – ACA Mirabella
6. HFM European Service Awards – Best Cyber Security Service – ACA Aponix
7. RegTech Insight Awards 2021 Europe – Best Vendor Solution for Managing Operational Risk – ACA’s ComplianceAlpha.

How we help

In addition to our award-winning financial services compliance consulting and GRC managed services, we offer the following market-leading services and solutions from our London office for clients with a European presence:

• ESG
• Regulatory hosting
• GIPS^® compliance and independent performance verification services 
• Regulatory technology
• Cybersecurity, privacy and risk solutions

We serve over 900 clients across 30 different countries from our London office. Our client base ranges from start-up hedge funds and private equity firms to established alternative investment asset managers and global investment banks with an AUM of more than $2T. Visit our ACA in Europe page to learn more.

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