Entity management 101 for private fund professionals

September 22, 2023

Little prepares you for working at a private fund, whether as an associate GC or a junior business professional. In the first year, you’ll encounter myriad legal issues and assignments that never arose in school or were, until now, purely theoretical. During this time, you’ll have to quickly build your knowledge and skills to meet the demands of the job.

To help, we wrote Entity management 101 — an explanation of entity management within private funds, current practices, and the advantages of adopting a modern entity management solution.*

What is entity management?

Entity management encompasses the processes and tools private fund managers use to oversee their numerous legal entities, including corporations, LLCs, limited partnerships, and foreign entities. Managers must store important documents, accurately record governance information, and navigate the relationships between fund, management, and portfolio investment entities.

Why does entity management matter?

Entity governance information is foundational knowledge that you’ll use to perform a variety of activities, including but not limited to:

  • Maintaining legal entities through annual renewals
  • Completing regulatory filings
  • Understanding and using key information about portfolio investments
  • Authorizing corporate actions appropriately
  • Structuring new deals
  • Distributing capital from an investment
  • Supporting tax and accounting workflows

You’ll often need to communicate structures, relationships, and corporate governance information to external counsel, accounting and tax advisers, LPs, co-investors, and counterparties. Whether entity information is readily available influences how quickly and effectively you can communicate with these other stakeholders.

Your firm’s entity management practices also influence your reliance on outside counsel. In many cases, you may need to reach out to your external law firm about corporate entity information on a weekly (or even daily) basis, racking up unnecessary fees.

How do private fund managers currently handle entity management?

Firms typically lack an industry-specific solution for legal entity management. Instead of a centralized source of truth, entity information is scattered between paper and electronic documents, binders, slides, spreadsheets, and structure charts.

Often, one or two people within your firm will manage structure charts, capitalization, and corporate governance information, which forces you and other professionals to rely heavily on these key personnel and the firm’s outside counsel.

Ultimately, you trudge through entity management workflows, spending too much time looking for up-to-date information and too much money on outside counsel fees.

Risks of current entity management practices

  • Dispersed and siloed information
  • Out-of-date information
  • Manual, time-consuming tasks
  • Inefficient collaboration
  • Key person risk
  • Inability to scale
  • High outside counsel fees

Modernize entity management with Ontra Atlas

Examples: What can go wrong with current entity management practices

Example 1: Daily portfolio management

Depending on your role, you may need to access structure charts, capitalization information, and other key documents on a daily basis. Common tasks include confirming the fund’s ownership stake in a portfolio company, identifying a portfolio company’s directors and officers, and determining who has signature authority for corporate actions. Currently, you might have to find the right word document, spreadsheet, or slide deck, look through a static structure chart, or even flip through a printed deskbook for this information. This is where risks come up. It’s challenging for firms to keep multiple sources of information up to date. If your document or structure chart isn’t always updated accurately and promptly, you might rely on inaccurate information.

Example 2: Navigating a senior employee exit

Investment professionals often serve as officers and board members for internal entities and portfolio investment-related entities. When one of these professionals resigns or retires, the firm is responsible for making sure positions are appropriately transitioned to other professionals. Ideally, the firm would formally document resignations and replacements from each position and for each entity. However, because it’s often hard to efficiently find all the positions that person holds, the best you might be able to do is have them sign an omnibus resignation letter and work through entity- and position-level changes one by one.

Example 3: Preparing for an SEC exam

If the SEC selects your firm for an exam, the Division of Examination may send you a notification letter with an initial request for documents and information. A September 6, 2023 SEC Risk Alert provides more information, but document requests will likely include a demand for organizational and portfolio management information, such as:

  • Organizational structure, affiliations, and control persons
  • Current and former supervised persons, officers, and/or directors
  • Joint ventures or other businesses, including those with respect to the firm or any officer, director, portfolio manager, or trader
  • Remote offices and branch locations
  • Securities held in all client portfolios, including information identifying each client holding an interest, the amount owned by each client, the aggregate number of shares or principal and/or notional amount held, and total market value of the position
  • Information about certain types of client investments, e.g., private investments and initial public offerings
  • Publicly traded companies for which employees of the adviser or its affiliates serve as officers and/or directors
  • Companies for which employees of the adviser or its affiliates serve on creditors’ committees
  • Outside compensation to supervised persons, including compensation related to client’s transactions or investments
  • Client portfolio profile information, e.g., investment objectives, investment strategy, risk tolerance, suitability, and mandates

To satisfy these asks, you’ll need to pull structure charts, organizational documents, capitalization schedules, officer & director slates, etc., to respond to the SEC within a matter of weeks.

Example 4: Piecing together an older transaction

One of the most challenging situations for in-house legal is when an older transaction becomes relevant again. It can be difficult to locate key individuals, particularly for substantially exited investments. Responsible deal professionals may have left the firm or moved on to other priorities. For example, you may need to distribute escrow amounts related to the sale of a portfolio company that occurred a few years ago. To do that, you’ll have to gather information to appropriately authorize the release of and accurately distribute the remaining funds. In these situations, it’s common to have to locate and dig through older electronic and paper documents. Depending on the age of the transaction, documents might have been saved on individual drives, scanned as image files, or not scanned at all. You may have to reach into your archives, pull boxes from storage, and dig through records to reconstruct history, determine ownership, and more.

Streamline entity management with Ontra Atlas

Ontra Atlas is a modern entity management solution for private fund managers. Ontra Atlas streamlines how firms organize and manage their many legal entities across funds, saving them time and helping them reduce risk.

With Ontra Atlas, private fund managers can:

  • Consolidate and store entity data and associated documents in a single source of truth
  • Generate customizable structure charts to easily visualize entity ownership and relationships
  • Track directors, officers, and authorized signatories to complete corporate actions appropriately
  • Manage internal and external access to information through role-based permissions to facilitate data security and integrity

These capabilities benefit legal, investor relations, tax, accounting, and deal professionals who can collaborate more effectively in a centralized entity management system to lower the cost of managing and maintaining this information.

Benefits of a modern entity management system

  • Data accessibility and integrity
  • Improved collaboration
  • Enhanced efficiency
  • Reduced outside counsel spend
  • Ability to scale processes
  • Security with role- and entity-based permissions


A new part of Ontra’s Legal Operating System

Ontra Atlas is the latest addition to the Legal Operating System, an AI-enabled suite of solutions that digitally transforms legal processes for private funds. Backed by Ontra Synapse — our industry-specific AI — Ontra Atlas joins Contract Automation and Insight to provide private fund managers with solutions for the entire fund lifecycle.

Discover a modern entity management solution for private equity

Additional Resources

*Ontra is an alternative legal services provider. We are not a law firm and do not provide any legal services, legal advice, or referral services and, as a result, we do not provide any legal representation to clients, nor do we participate in any legal representation of clients. The contents of this article are for informational purposes only, and are not intended to constitute or be relied upon as legal, tax, accounting, regulatory, or other professional advice, opinion, or recommendation by Ontra or its affiliates. For assistance or guidance regarding the impact or applicability of the topics discussed in this article to your business, please consult your legal or other professional advisers.

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