BACKGROUND

Meradia was retained by an $8 billion AUM multi-family office to assess their investment application stack, organizational design, and operational processes. Like many investment management firms, the company had grown over time and their system stack had become ‘patchworked’, resulting in an operating model that had become overly manual and inefficient. Our initial assessment determined that most of the functional pain could be traced back to a lack of a fit-for-purpose investment book of record. In addition to the IBOR need, the multi-family office sought a comprehensive accounting package that could meet multiple operational objectives including IBOR, General Ledger, Participant Record-Keeping, Reconciliation and security-level Investment Performance, along with suitable reference data to support complex security valuation. In addition to US Equities and Bonds the family offices held overseas investments, direct investments, co-investments, private equity, real-estate, bank loans and derivatives including swaps.

ANALYSIS

We worked closely with stakeholders to specify, document, and prioritize core requirements. It was understood there was not going to be a one-size-fits-all solution so the challenge was to find a platform that would support as much of the operation as possible. Knowing this at the outset, we organized the RFP according to function such that the strengths and weaknesses of different solutions could be readily ascertained and the client could easily decide the impact of adding supplemental components to a strong core platform.

RESULTS

Client benefits include:

  1. We identified a solution that supported approximately 70% of operation including partnership accounting, reconciliation, IBOR, and some performance measurement. The remaining 30% was supported by proprietary solutions and enhancements to the existing general ledger, which was a bonus considering the assumption that the GL would need replacement.
  2. We specified cross-functional requirements like look-through performance reporting (combining partnership accounting with their investment performance calculation objectives) our client overlooked.
  3. We shielded client teams with busy day-to-day schedules from taxing vendor interactions. We were able to quickly narrow down our client’s 30 vendor long list. Once the RFP was submitted, we were often asked to review it line-by-line with vendors, explain in repetitive detail the requirements particularly unique to this client, work closely with vendor technology teams to load specific data sets for demos and to answer a daily deluge of ad-hoc questions from various stakeholders.
  4. After consulting with vendor-specific SMEs, we worked closely with both client and vendor to create demos that would specifically highlight both product strengths and areas of weakness during targeted demos.
  5. We coached the client before and during the negotiation process on pricing, implementation fees, and service level agreements.
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