Compliance Reporting in Private Equity: Why Vendor Management Matters

As rules, regulations, and requirements tighten up for mid-market financial services firm, vendor management becomes more critical for compliance management and reporting.  

Compliance reporting has always been an important and necessary aspect of operating a financial services firm. From regulatory requirements and governance activities, enabling investor and market confidence, managing risk, and ensuring deal execution, compliance reporting is a critical function that covers a wide spectrum of activities and areas across financial services firms.  

In recent years, vendor management has become an even bigger component of compliance reporting. With new potential SEC regulations like the Enhance Private Fund Investor Protection, and the Oversight Requirements for Certain Services Outsourced by Investment Advisors, to the ever-changing needs of LPs around ESG and ILPA reporting, and the European MiFID regulation, maintaining information and records on the vendors firm’s use has become mandatory.  

Beyond the compliance reporting, the way financial services firms think about spend and manage it from a compliance perspective has changed dramatically in the last year. With lower interest rates and more capital raising, there was a significant surge in vendor related spend in 2021 and 2022.  In 2023, with the cost of capital going up significantly, every dollar must be deployed at a higher threshold.  Driving savings and optimizing vendor spend has become more visible and a high priority with regulatory boards ensuring firms are being good fiduciaries and not passing on unnecessary costs to their funds / investors.  

The challenge for many firms is time, resources, and tools to effectively track, report, and monitor an ever-growing vendor network.  They struggle with incomplete data, visibility into their vendor portfolio, the resources (people and tools) for not only the initial vendor due diligence, but to monitor and maintain vendor information as required by oversight and enforcement entities. Many also lack the clarity around peer best practices in conducting vendor diligence, portfolio optimization, and maintaining records related to due diligence and monitoring requirements.

As a procurement-as-a-service company specializing in working with mid-market financial services firms, Concertiv helps clients with their vendor diligence to ensure they have the information they need for compliance reporting and audits, while also being a good fiduciary.

Here are a few ways that Concertiv can help your firm:

• Providing a central point of contact for vendor management. One of the challenges we frequently hear from firms is that vendor management is decentralized. Various contracts are controlled by various people and departments within a firm. By centralizing vendor management, you have a single contact and source of truth for vendor management.
• Delivering real-time tracking and reporting for vendors via our Concertiv360™ platform. This includes the basic vendor details such as contract start and end dates, contract value, as well as key components like who has access, who requested it initially, and the intended use cases.
• Managing standards for contracts to ensure consistency across vendor contracts. This includes ensuring that key vendor contracts include the necessary firm standards such as warranties, representations, and due diligence within contracts to ensure consistency across your firm.  
• Industry insights and experience to ensure your vendor portfolio is fully optimized. This ensures that not only is your firm using the right tools based on the needs, but also ensures your firm isn’t overpaying by paying for the necessary seats and licenses needed, and isn’t breaking contractual obligations with users circumventing contractual rules.  
• Peer best practices for vendor diligence, portfolio optimization, and maintaining records related to due diligence and monitoring requirements. With a specialization working with mid-market financial services firms, we are able to leverage our experience and knowledge to deliver industry-standard processes and best practices to ensure your firm is leveraging the best practices.  

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