Assure, one of the leading providers of special purpose vehicles (SPVs), has collapsed and is rumored to be filing for bankruptcy. According to numerous sources, they have terminated the majority of their staff, and they are referring customers to other providers.
Assure provided fund admin, including operations and accounting support, for hundreds of SPVs and a smaller number of funds. The majority of fund service providers are already overloaded and are unable to properly service the incoming business.
For example, Carta has experienced product delays and has told new leads that Q3 and year end reporting may not be possible. Allocations downsized their staff and has limited capacity, and, according to rumors, a number of key team members are leaving.
Overzealous salespeople are promising seamless transitions. The reality is that the fund admin industry does not have the capacity to absorb the Assure failure. So, what do you do if you need a new fund admin partner?
How to find an Assure replacement?
Former Assure customers are scrambling to find alternatives. To start finding a replacement, it is best to understand your needs or requirements around service, speed and cost. Then, you can match the available options to your needs.
- For service, Assure provided an overall low service level, which was a common complaint among customers. If you have large limited partners or custom terms, such as variable carried interest or side letters, then you may require a higher service level.
- For speed, Assure was considered slow to medium speed. If you have limited partners that ask a lot of questions or deals that move quickly, then you may require a provider that is able to provide quick responses and a fast turnaround time on projects, such as formation or reporting.
- For cost, Assure was a low cost service provider. If you need a higher service level or faster response times, then you should expect to pay more. In general, expect to pay more if you do not want to go through this process again when the next low cost provider goes out of business.
As the old saying goes, if you want cheap, fast and good, then pick two.
Finally, be wary of providers that make bold claims about their migration process. Vendors use terms like ‘lossless’ or ‘automated’ migrations to market their products, but they don’t accurately portray the complexity of this process. These migrations are difficult and you should ensure that you partner with vendors who will go above and beyond to help you out.
What are the alternatives to Assure?
Since all providers are overloaded, everyone will need to pitch in to help pick up and distribute the load or there will be chaos for general partners and limited partners worldwide.
For select firms and those in the VC Lab network, VC Lab is offering a mid level solution to migrate a fund or SPV to our private platform used by over 300 firms, Decile Hub, and our exclusive back office, Decile Partners. You can apply here.
In addition to the mid level solution by VC Lab, there are low end and custom solutions available:
- Low service and low cost providers: AngelList, Carta/Vauban, Flow and Allocations.
- High end and high cost custom solutions: Aduro Advisors, Kranz Consulting or Alter Domus.
How to migrate off of Assure?
It should be noted that migrating a SPV or a fund account is not an easy process. It is not uncommon to be missing necessary data on limited partners that will need to be collected. The new provider needs to read and familiarize themselves with the documents, and then the provider needs to validate that all of the previous accounting was done correctly. Mistakes do happen.
All of the prepaid fees on Assure are lost, and new providers commonly charge setup and annual maintenance fees. The new fees may be larger than Assure. The good news is that these fees are fund expenses and can often be reimbursed by the limited partners. The bad news is that limited partners may contest paying additional fees.
Here are the major steps:
- Identify Your Needs
- Research Alternative Providers
- Analyze the Switching and Annual Costs
- Notify Limited Partners of Cost Changes
- Select an Alternative Provider
- Collect All Fund Materials
- Find Any Missing Fund Materials
- Engage Alternative Provider with Fund Materials
- Onboard with Alternative Provider
- Complete Fund Transfer Process
- Review Fund Transfer Accuracy
Good luck with your transition. Leave questions in the comments. VC Lab is here to help.