Why Outsourcing Fund Admin Is the Smartest Move PE Leaders Can Make in 2025 With Michael Von Bevern

Episode Overview

In this episode, Alex Rawlings welcomes Michael Von Bevern, Co-Managing Director for Sunterra Fund Services, to discuss the evolving landscape of fund administration in private equity. Michael shares nearly two decades of experience, working with over 500 fund managers, and offers invaluable insight into common mistakes first-time managers make, the growing role of fund administration, and why outsourcing has become the gold standard for operational efficiency and investor confidence.

🔑 Key Discussion Points

00:00 – Introduction
Michael Von Bevern introduces his role at Sunterra Fund Services and his extensive background in fund administration.

01:00 – Common Mistakes First-Time Managers Make

• Trying to be overly creative with fund terms and waterfall structures.
• The importance of staying aligned with industry-standard terms in the first fund.
• Complexity can hurt comparability for institutional investors.

03:00 – The State of Capital Raising

• Capital raising is particularly tough right now.
• Institutional investors require clarity, standardization, and comparability.
• Advice: Stick to well-known structures and build trust first.

04:00 – Why Outsourcing Fund Administration is Crucial

• Fund administration has evolved from an internalized process to a norm for outsourcing.
• Early resistance was based on trust and control issues.
• Outsourcing offers scalability, access to high-end tech, and cost advantages.

06:30 – In-House vs. Outsourced Fund Admin

• Outsourced teams can mirror internal teams in quality and responsiveness.
• Modern fund admin is more than just accounting—it's a strategic enabler.
• Today, ~80% of PE firms outsource, up from 50% in 2016.

09:00 – Why Private Equity Firms Hire from Fund Admin Firms

• Fund admin professionals gain holistic knowledge: legal docs, accounting, operations, strategy.
• They're “multi-tools” vs. siloed specialists.
• Michael celebrates when former team members go on to run their own funds—and even become clients.

12:00 – What Makes a Gold Standard Fund Admin?

• Real-time access to quality data and timely reporting.
• Transparent, responsive communication.
• Strong tech + strong people = winning formula.

13:30 – The Shift Toward Data Accessibility

• Gone are the days of black-box reporting.
• Modern fund admins provide daily access and reconciliations.
• The focus now is on improving affordability and automation.

14:30 – Michael’s Recommendations

• Reads: Preqin, PitchBook, newsletters.
• Follows thought leaders like Howard Marks (Oaktree).
• Active in ILPA and New York's PE ecosystem.

16:00 – Market Trends Observed Through Fund Admin

• Fundraising in 2023-24 has slowed, with private credit outperforming PE.
• Saturation from 2021–22 launches is causing fatigue.
• Prediction: Q4 2025 to Q1 2026 will see a strong rebound in fundraising.

18:30 – How to Reach Michael

• Website: sunterra.com
• Open to DMs and happy to refer prospective clients even if Sunterra isn’t the best fit.

 🔗 Connect with Alex Rawlings on LinkedIn: [https://www.linkedin.com/in/alexrawlings/](https://www.linkedin.com/in/alexrawlings/) 🌐 Visit Raw Selection: [www.raw-selection.com](https://www.raw-selection.com) 

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Transcript

00:00
Welcome back to the Raw Selection Private Equity Podcast. Joining us today is Michael Bevin, Co-Managing Director for Sunterra Fund Services, a fund administration firm.  Let's dive in.  Michael, if you can show us a brief insight to you, Thanks Alex. I'm Michael Von Bevin.  I am the Managing Director for Sunterra Global in  North America.

00:27
I run their fund administration business um for Sunterra. We operate  out of a few offices here in the U S um I'm located in Short Hills, New Jersey, and I've been in fund admin,  um, about coming up 19 years. So I've,  been in a long time, seen a lot of cycles,  worked with a lot of funds, worked with probably over 500 managers,  um, over those nights.

00:57
Perfect. So what's one mistake that you see private equity or portfolio companies making and what would you suggest to correct them? Well, I do work with a lot of emerging managers, a lot of first time managers.  And in general, they sort of follow the same path that they're not going to be successful. um And that  is usually sort of not trying to

01:27
stay with um industry standard terms. You know, when they try to launch their first fund, I see people try to get too creative when they come out of the gate  with a new offering, with a new firm, because, you know, they're trying to differentiate. um However, most investors  who  have, you know, the ability to allocate, you know, to a lot of

01:56
different managers in your particular space, whether it's say VC or buyout or growth equity,  they want to be able to compare like to like really quickly. So when they look at your firm versus everyone else, tell people all the time,  just make sure it's super obvious when they're looking  at your documents, how do they get their money back? When should they expect to get it back?

02:23
Nothing too complicated with regards to the waterfall, nothing too complicated with regards to the terms. So um I would say  in general, uh a consistent trend  are firms that  try to be too creative. Get creative on the second one, the third one. um Stay with  standard terms on the first one. Okay. And that's predominantly sits on  them getting too creative on the waterfall to try and make themselves a little bit more attractive.

02:52
Because capital raising is tough.  It's always hard, but it's specifically hard at the moment.  Yeah. mean, capital raising is particularly hard at the moment.  again, I think when you're, especially when you're looking at institutional investors, much different story, uh, when you're sort of working with friends and family and what I'll call insider money. Um, when you start to go beyond now to, you know, family offices and, you know, multifamily offices and

03:22
know, endowments and pensions, and they don't know you the way your friends and family do, ah they need to be able to compare you  in a way that's sort of like for like. So um I would suggest, you know, going with if two and 20 is still the standard, then stay with two and 20, make it obvious to how the distribution waterfall works.  Be going to make it complicated, make sure it's complicated in their favor  and you can explain it.

03:53
Perfect. So given your line of work as a fund administration firm, I'm no doubt that you'd be an advocate for the outsourcing of fund administration. But what's your perspective on why that is so important? I think, you know, being in for 19 years now, I've seen the evolution of, you know, fund administration with regards to the various types of strategies. So when I first got into fund administration, you know, it was really more of a

04:22
a hedge fund  offering.  When I first launched  my first fund,  my first fund administrator in 2016, my business plan really focused on around the fact that about 50 % of all the private equity firms were  still insourcing the work.  I felt like the main reason for that

04:49
and your audience could disagree. But at the time, I felt like the main  reason for that was there was this sort of inclusivity and trust that goes on within the private equity world amongst the deal team, which extends to  the back office, the accounting and the operations people, the IR people, where what we do is unique and should be sort of within our four walls.

05:17
And so there was this sort of education that was going on  and slow acceptance into, you know, using an outsourced third party. And that to me started with trust, you know, the same level of trust that you would have with the internal team you needed to have with that external team. So,  you know, we focused heavily on offering that to,  um,

05:46
private equity firms with the combination  of, you know, know, boutique, hands-on service,  and at the time, you know, modern technology. So when you looked at it  as far as, okay, I can source this in-house. Yes, I maintained full control over the team, you know, the knowledge and  look at it.

06:16
compared to  outsourcing, well, I still pick up a really quality team. I pick up software that potentially I may not be able to afford myself,  now using it on a fractional basis.  And when  you look at that combination, it's almost the same as if you were doing it in-house.

06:44
And then the added benefit was fund administration is a cost of the fund versus a cost of the manager, which all the internal people are. So I don't have to say that anymore. Like that's not part of our pitch anymore because that's so widely known. But back in 2016, when I launched my first fund administrator, that was definitely part of the pitch. Today, people see it almost as table stakes to launch your fund.

07:14
They generally go with a fund administrator. So 50 % using fund administrators back in 2016, that number is probably up around 80 % today. But the industry in and of itself really hasn't changed that much. We still are a collective of good people who understand the strategy, providing outsourced, leveraged technology.

07:45
And, you know, ultimately, you know, provide you with that ability to grow  on a more of a sort of a, you know, like a cloud basis where you launch a new fund tomorrow. You you just let me know.  And I say, great. I have the people who can handle that. You launch a new fund tomorrow and you talk to your internal team and they're already maxed out. Now you have to go hire another person and.

08:12
deal with  all of that HR related issues. ah You don't deal with any of that when it comes to fund administration. ah Vacations, maternity leave, sherry duties, that's all my problem. That  is not the  manager's problem anymore. And firms like mine who are sort of in your time zone, who are often dedicated teams, can look and feel just like an internal team.

08:43
And so, you know, that's where I think we are today. Sorry to interrupt. Just a quick mention of our longstanding partnership with Grata. As you will probably know, the private equity scene is constantly evolving and deal flow is moving now to proprietary and data-driven processes. Grata provides you with the data and information of over 7 million private companies. So if you're looking to improve your proprietary deal flow,

09:11
and improve the data access and reach out to Grata today. Now back to the podcast. With  regards to the fundamentals that learned by people in fund administration, from working in Search Ourselves, we see quite a lot of people moved into the back office or moving or transferring into the back office of private equity firms.  Why do you think that fund administration becomes a target for private equity  to hire the people in those firms? Yeah, my experience, always has been.

09:40
There's been times where I felt sort of like a farm system for managers and GPs over the years. um know, teams like mine  who are dedicated to each client. So I don't have a lot of utilitarian groups where I just have one person do this and one person do that. uh We basically function as one team does everything for every client. So by the time somebody

10:10
you know, who maybe graduate university or college and starts to work with us two, three years later, you know, they come out with a set of skills that, that include, you know, understanding the legal documents, understanding, um, the tax implications, understanding the accounting, understanding the operations and to some degree, the strategies. So  by the time you have that sort of breadth of knowledge, you know, you're looking at potentially.

10:40
Maybe two, three people who have worked at bigger firms who have worked in one individual sort of silo of that versus somebody who's worked at a fund admin who has maybe not as deep of depth, but has depth nonetheless,  and certainly has a breadth  and uh of experience. So ultimately I know managers are looking to hire as few people as they can in their back office.

11:09
And fund admin, you know, folks, you know, offer them that potential possibility. They can step into some IR roles. They could step into operational roles, some treasury roles, some accounting roles.  Um,  and, you know, just, just their overall, you know, skillset is just really strong.  And so when I graduate a person, when I call a graduate, graduate a person out from here into a manager.

11:39
ah It makes me feel great.  And there have been situations over the years of 19 years of doing this, where I have graduated people out of fund administration to the point where they  run their own funds now and have selected me back  as their fund administrator. So at one point they worked for me and now I worked for them. There is no better case study for me ah than that situation. Excellent. So looking at the...

12:09
the gold standard from a fund administration perspective. Obviously there's different firms that offer funded administration services, but looking at that from a private equity lens, you've worked with different firms, you've seen different,  I'm sure you've seen the old classic of good, bad and ugly.  What are the things that you're seeing within private equity that you go, yeah, these guys are  absolutely right at the top of the game from a fund administration perspective? Well, I'd like to think that's us.

12:38
Um, but in reality, it's to stay, you know, at the gold standard in our business. It's changing, you know, fairly rapidly and fund administration  as an industry changes relatively slowly. Um, but from a gold standard, I would say my number one requirement, if I was looking  at a fund administrator  is  access to data, you know, good data, timeline, right?

13:08
So when I first started 19 years ago, uh it was a black box. Funds gave us their data and then weeks slash months later, we gave them back something that they were supposed to interpret and  to determine whether this was accurate or not.  Today,  we're in constant daily contact with our funds. They can see their results on a daily basis.

13:34
If they need accounting reports, they can get accounting reports. they need, you know, deal and position level information, you know, they can get that  today. We're performing reconciliations to third parties oh on a more frequent basis. So that is the, the, the current, you know, sort of best practice to be able to give good, accurate data on a timely basis. Now the key is.

14:03
How do you make it more affordable? ah And that's where the industry is trending now. What do  you read? What do you watch? What do you listen to that you should recommend that others check out,  Well, I do follow a number of newsletters.  I'm a subscriber to a few. Some of them are free. I follow some of the standards like Prequen and Pitchbook. ah I do follow a number of larger managers. ah

14:31
either from  a personal perspective, like  Howard Marks, Oak Tree,  is somebody I follow.  And I just really enjoy uh some of the content that I see on places like LinkedIn for some of the groups that I follow. um We're part of ILPA, we're embracers of the ILPA standards.

15:01
get involved with their sort of uh initiatives. um And most importantly  is we're out and about  and we're in the New York City area. So there's constant events. We have a really great network  of other service providers, whether it be accounting firms, law firms, valuation firms, placement agents  that keep us in the know. We like to collaborate a lot  with those folks.

15:30
to stay on top of  what's going on. um so doing things like this um is a great way for us to  stay current. mean, of the  perceived downsides of fund administration is it's a little reactive to the market. So whereas a GP is...

15:58
at the market right now as they're doing deals. um That is true. And we sort of see it sort of slightly after the fact on sort of a T plus one basis. And we're obviously not in the room when they're making the decision, or folio company A versus for portfolio company B, we only see the result, you know, that they picked one of the two. um But what we can, you know, accumulate is a lot of data from a lot of funds.

16:27
And draw a lot of correlation between all of that to determine where we think the industry is at and where we think it's going. So for example, we talked about fundraising before, you know, we have, I think five or six new launches in our pipeline right now. People who are in the fundraising process  and the story is the same across all five of them. You know, they have a

16:57
They have a target close  and  ultimately they are struggling to get to that number.  And um can I tell you exactly why or what they're hearing from potential investors? No, I'm not in that realm, but I can see that they're all struggling and all sort of going after the same  investor base. So there's something within the current investor base with regards to timing.

17:25
that is keeping people from committing. It could be just saturation from the market. we see the trend in the market where back in 21 and 22, there was an extreme amount of new fund launches. So for 23 and 24, we saw much less new launch activity. And when we did see it, we saw it more in private credit than we saw in private equity.

17:55
And, you know, our assessment for why that was happening um was just sort of fatigue  with regards to all the funds that  were launched right before that.  then ultimately it's sort of sickular  and  cyclical. Thank you. Appreciate that. you know, as managers um are trying to find

18:25
investments for these funds, everything was just taking a little bit longer. So we actually see Q4 of 2025 into Q1 of 2026 to be a strong period, is our prediction strong period for fundraising. just based upon our data that we're seeing. Interesting. So if anybody wishes to reach out to you, Michael, how best did they get in touch, please?

18:55
Um,  uh, I am reachable from  the Santerra website, santerra.com. I'm also on LinkedIn.  Um,  and,  uh, yeah, if anybody direct messaged me on LinkedIn and I always get back to them. Um, if there's anything I can do to help, whether it's  educate,  um,  or explain our specific services, the one thing I am.

19:25
excellent at  is knowing where people might be a good fit and fund admin. Being that I've  sort of one of the more veterans of the industry, I pretty much know every fund administrator out there. there are definitely situations where I'll talk to people where we may not be the best fit. ah But I probably know somebody who is  a good fit for you.  And I can definitely help, you know.

19:53
steer you in that direction, make introductions, know lots of lawyers, know lots of bankers, know lots of accountants. um So potentially be a resource that way as well, if ultimately  help you on the fund administration side. Perfect. Well, thank you very much for coming onto the  Private XU podcast today. I appreciate it, Alex. Thank you very much for inviting me. And as always, thank you very much for everybody for tuning in yet again to the Private XU podcast. Till the next time, keep smashing it.

20:23
and you very much for listening.