When Delta Global Management launched its hedge fund in 2023, COO/CCO Brian Falahee knew that setting up a solid finance and accounting (F&A) function from the start would save the firm from significant headaches down the road.
Having worked with Consero Global previously at Whale Rock Capital, Falahee was confident in Consero’s ability to provide the right mix of expertise, processes, and technology to support Delta Global’s early-stage needs.
Brian joined Julee Nevarez, Practice Director for Investment Manager Solutions at Consero, to discuss how engaging Consero from Day One delivered immediate benefits for Delta Global, establishing best practices and F&A infrastructure that gave stakeholders a high degree of confidence in the firm’s ability to scale efficiently.
Leveraging Trusted Partnerships
When launching Delta Global Management, Falahee was conscious that building robust financial operations early would reduce future work and headaches down the road.
With a longstanding relationship, he knew Consero would be the right partner to develop the firm’s finance function.
“The initial startup, it’s so important, if done correctly, will create way less work in the future…I was a one-man shop trying to implement and onboard everything, so getting Consero up and running and having them help out on the management company books, records, as well as the HR side, really did help.”
“We were able to know with a very high degree of confidence that, when we hired Consero, those parts of the management company were going to be handled appropriately. It was just one less thing that I had to do,” says Falahee.
Early Partnership Benefits
Consero provided immediate relief by handling the management company’s books and records, as well as HR-related tasks. This allowed Brian, who was initially a “one-man shop,” to focus on other critical aspects of the fund launch.
Brian’s previous positive experience with Consero instilled a high degree of confidence that their F&A needs would be handled appropriately.
Engaging Consero from the outset helped establish strong accounting, reporting, and control frameworks from day one, minimizing future rework.
Outsourcing the setup and ongoing management of the GL and related processes freed up Brian and the Delta Global team to concentrate on investment strategy and firm growth.
Building Robust Internal Controls and Separation of Duties
In the post-Madoff era, operational due diligence places significant emphasis on controls, particularly around cash management within the fund.
For Falahee, instilling similar controls at the management company level was critical, and he relied on Consero to facilitate this.
“Segregating controls is a basic function…A lot of founders at funds just aren’t aware of how insecure their management company is.”
“Having a firm like Consero as a fund admin for your management company enables you to get the same level of controls that you would put on your fund. It’s also giving real-time T+1 transparency to the management company.”
“You see the books and records being on an independent web interface, managed by Consero…I can give my partners access to that so they have real-time transparency,” says Falahee.
Fund Management Benefits
Consero acts as an independent third-party managing the management company’s books and records on a secure web interface, providing real-time transparency to partners.
Consero handles the posting and release of cash disbursements, requiring review and approval from Delta Global but preventing any single party within the firm from having unilateral control over both the books and cash.
Implementing these controls provides investors (LPs) with confidence that the management company operates with the same fiduciary standards as the fund.
The separation of duties inherent in Consero’s model significantly reduces the potential for fraud and financial mismanagement within the management company.
Gaining Efficiencies Through Outsourced F&A
Partnering with Consero from the outset provided Delta Global with significant efficiencies in managing their finance and accounting functions, allowing them to avoid common pitfalls and streamline day-to-day operations.
“We view Consero as a partner and extension of our team. It takes a lot of time if you were trying to do it internally. It’s that perfect combination of:
- Is it going to take a lot of your time? Yes.
- Are you going to be able to produce a superior work product to what Consero’s doing? I would say “no,” I wouldn’t be able to replicate.
So then it becomes a no-brainer. It’s something that really helps us and saves us money in the long run because, if not, we would probably have to hire another person to handle this,” said Brian.
Key Benefits
Consero worked with Delta Global to establish a tailored chart of accounts and vendor mappings from the beginning, preventing future rework and ensuring financial reporting met the specific needs of the founders.
Utilizing platforms like Bill.com, managed by Consero, significantly streamlined the bill payment process, reducing the time spent on invoice tracking and approvals.
Outsourcing F&A to Consero freed up internal resources from time-consuming tasks, allowing Delta Global to focus on strategic initiatives.
Brian noted that Consero’s expertise and focus on management company accounting result in a higher quality of work than they could achieve in-house.
By leveraging Consero’s services, Delta Global can support its growth without the immediate need to hire additional internal finance staff.
The Value of a True Partnership and Expert Guidance
As the point person for all of Delta Global’s vendors, Brian noted that many outsourced models don’t offer satisfactorily tailored service and expertise.
“I’ve been surprised at the evolution in the service provider space. It seems like a lot of models now are…’You have to fit within our playbook.’…As the client, if you want your problem solved, (they) will help you, but only if you do X, Y, and Z first.”
“The second downside is the person that you’re dealing with on the other end…a lot of times they’re not the experienced professionals that maybe you dealt with 10 to 15 years ago.”
He contrasted that experience with Consero’s customized approach, and the value of working with experienced professionals who act as an extension of the client’s team.
“I’ve always appreciated with Consero is it’s very much a customized model. You do have standardized procedures, work offerings, and products, but it’s very much a ‘Hey, can we talk about this? Can I explain my problem and you give me your opinion?’”
“With Consero you’re talking to a seasoned professional who knows more than you do. You really act, not like a service provider, but like you’re part of the company…They understand me, they understand my business, and they are really knowledgeable about what we’re trying to do.”
The Consero Difference
Unlike standardized “playbook” models, Consero offers a more tailored approach, allowing for direct communication and collaborative problem-solving.
Delta Global interacts with experienced professionals at Consero who possess deep knowledge of hedge fund management company accounting.
Consero goes beyond simply executing tasks, providing valuable insights and guidance based on their broad experience working with various investment managers. They can anticipate potential issues and offer proactive solutions.
Consero acts as a true partner, invested in Delta Global’s success, and isn’t hesitant to offer constructive feedback or challenge requests if they foresee potential negative consequences.
Consero’s work with a diverse range of investment managers provides them with a unique perspective on industry best practices and solutions to common challenges.
Quantifying the Return on Investment (ROI)
Brian identified several key areas where the Consero partnership has demonstrated a significant return on investment for Delta Global Management.
“Number one is the efficiency and the time save. You’re saving an enormous amount of time by not having to set up books and records by not having to become an expert in various different things.”
“I think the trust, being able to sit with your partners and say, ‘Here’s the system that I built for you. It’s a robust system that gives us complete controls. You know that everyday…you have full transparency and if you ever have any questions you can call an independent group, Consero, and you can talk to them directly.”
Significant ROI
Outsourcing to Consero saves an “enormous amount of time” by eliminating the need to build and manage the F&A function internally.
Consero’s expertise helps prevent potentially significant errors in areas like payroll, benefits administration, and tax compliance, which can lead to financial penalties and reputational damage.
The robust controls and transparency provided by Consero build trust with the firm’s partners, assuring them of sound financial management.
Accelerate Fund Growth with Tailored Solutions
For hedge funds, Consero’s impact goes beyond administrative relief. By integrating robust controls, enforcing separation of duties, and delivering real-time insights into financial data, Consero reduces the potential for error or fraud while enhancing transparency for both internal stakeholders and external investors.
With a seasoned team of professionals who act as a genuine extension of the hedge fund’s operations, Consero offers the precise combination of expertise, customization, and proactive guidance that new and established funds alike require for long-term success.
We have flexible, tailored solutions to meet your needs at every stage of growth.
- Our proven Finance as a Service (FaaS) model provides the systems, processes, and people to quickly operationalize your finance function to produce reliable, board-level reporting powered by our AI-enhanced platform.
- If you prefer your existing tech stack, we have the expertise to work within your existing system and general ledger. Through Consero’s Flex Finance service, we can manage the back-office F&A function from end-to-end process, including closing the books.
Request a consultation to learn more about how we can get your finances up and running.
