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How to Recognize if Your Fund Is Missing Opportunities

Anchin AlertOctober 21, 2021

How to Recognize if Your Fund Is Missing Opportunities

Traditional financial service providers provide audited financial statements, tax and accounting services, as well as consulting, for a hedge fund, general partner, and management company. Your hedge fund may have a requirement to use a certain size service provider to audit the financial statements issued to your investors. However, is this firm the right fit and size for your other business needs.

How can you gauge “fit”? Do you receive the proper guidance you need? Boutique firms, like Anchin, harness deep industry knowledge to provide a cost-effective alternative that includes senior-level advice and personalized service for your entities. Not only does this add an extra layer of expertise for your tax and accounting work, but it also means that you receive high-end consulting to assist you to seize the business opportunities and overcome the challenges of your fund.

This is the second article in a series that describes the wide assortment of services that Anchin’s Financial Services team covers – focusing on consulting.

Filling the Gap – Part 2: Consulting Services

Business Advisors and Consultants

Constant innovation in the financial markets must be met with equally innovative solutions from your financial services partner. In this environment, your provider should be more than just a tax specialist and accountant, but also a strategic business advisor whose role is to help you meet your short-term and long-term goals.

A larger accounting firm or national service provider may not have the time or resources to get to know the inner workings of your fund outside of your tax and audit needs. Ask yourself, how often they’ve introduced you to new industry connections or given advice on the direction of your business? If the answer is, rarely or not at all, this could be the sign of a mismatched provider.

A smaller, more specialized firm could support your fund with comprehensive institutional knowledge and experience, as well as access to their extensive industry network. When you work with Anchin, our experts provide strategic insights and a sounding board for your fund throughout the entire year, not just during tax season, as you search for new ways to grow your business profitability.

Valuation Services

The valuation of certain illiquid investments poses a common challenge for fund managers. Due to the complexity of these investments, where there is no active market, funds often require independent valuations. This process is an art as well as a science.

Non-specialty providers may not have the tools or the experience in determining valuations for these more complex investments, so they fall back on using generic industry “rules of thumb” which can lead to inaccurate conclusions. Not only would an improper valuation create ambiguity with your investors, it could also leave you exposed to disputes and even litigation.

An industry-focused firm like Anchin has the proper tools to determine these valuations, including the use of specialized databases, extensive research, and financial theory. Our team’s forensic background allows us to scrutinize the underlying numbers and assumptions behind the investments, as they can have a significant effect on valuations. Getting this objective, credible valuation will reduce questions and ambiguity while minimizing your fund’s exposure to legal trouble.

International Expertise

The financial community is a global one with a sizable constituency of foreign investors. To meet the needs of this market, there has been a significant increase in the number of offshore hedge funds.

To properly set up your fund’s financial infrastructure, it’s crucial that your service provider has the right international expertise to go along with their tax knowledge. Government regulation can be complex and even more so when you start working across national borders.

As you consider your current consulting arrangements, ask yourself whether your provider is working as a true partner in growing your fund, or if they’re merely checking a box by completing your tax work. If the answer is the latter, a specialty advisor like Anchin can help fill the gap.

If you have any questions about how Anchin’s Financial Services team can be of assistance to you, please contact Ed Thorp or your Anchin Relationship Partner.

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