Park Square Capital Cuts MFN Election Time and Legal Costs by Half with Ontra

Challenge

Park Square Capital focuses on scaling MFN processes to match growth

As Park Square Capital expanded its global presence, the complexity and volume of side letters and MFN provisions grew in parallel. With over 20 active funds and multiple Limited Partners (LPs) in each fund, investor demands became increasingly sophisticated as LPs negotiated tailored obligations. This led to an influx of complex side letters and, critically, MFN provisions.

Park Square Capital had previously employed a manual MFN process. However, as fund sizes and LP expectations grew, this manual system became increasingly time-consuming, cost-intensive, and vulnerable to the risk of manual error. In addition, LPs raised concerns about the burdensome and time-consuming election process, which required reviewing detailed election booklets.

Park Square and its law firm, Debevoise & Plimpton LLP, faced added challenges when investors exercised their MFN rights, requiring careful review of forms to ensure investors didn’t mistakenly elect provisions they weren’t entitled to. In general, as MFNs became more complex, the risk of errors increased.

“As volume grew and processes remained manual, the risk of missing something important increased,” explained Adam Morrison, Senior Legal Associate at Park Square Capital.

Determined to improve their workflow efficiency while maintaining standards, Park Square Capital saw an opportunity to embrace technology to streamline manual processes, provide a better investor experience, and reduce fund expenses.

AI-powered legal automation empowers better decision-making

The decision to adopt Ontra’s Insight solution aligned with Park Square Capital’s broader commitment to leverage technology across its operations. The legal team, already engaged in the firm’s digital transformation, identified Insight as the ideal platform to complement their existing process with Debevoise.

For Park Square Capital, it was critical that any solution would:

• Integrate smoothly with existing workflows.
• Provide investors with a cost-effective and easy-to-navigate solution.
• Efficiently manage MFN elections and resulting obligations.

Insight satisfied all those requirements in a single solution. In addition, Insight’s real-time visibility into side letter changes resulting from MFN elections ensured all stakeholders would stay aligned on the latest obligations, a critical element in the MFN process for both firms.

Adopting Insight resulted in seamless digital transformation for the teams. In fact, Park Square Capital’s first MFN process using Ontra’s Insight was one of the smoothest to date.

Solution

Park Square Capital reduces MFN complexity and fund expenses with Ontra

Adopting Ontra’s Insight has delivered measurable benefits for Park Square Capital, shortening time commitments and legal costs and improving accuracy and investor experiences.

While Park Square Capital still diligently reviews the legal documentation, Ontra eliminates the manual inputting of side letter provisions, reduces the risk of errors, and provides more control, especially with revisions, making the process much faster and more efficient. Using Insight, the firm has cut MFN completion costs in half and dropped the time commitment from several months to under five weeks.

The new workflow with Insight and Debevoise has significantly shortened the MFN process and lowered Park Square Capital’s legal costs. Moving to the digital database for MFNs has ensured greater accuracy, consistency, and efficiency, eliminating the need for manual comparisons and facilitating access to key information for all stakeholders.

Park Square Capital’s LPs have also benefited from the new process, especially the option to complete and sign their MFN election forms digitally. During a recent fundraise, 75% of LPs completed their elections digitally through Insight, improving accuracy and turnaround. The new workflow and automated process ensured the fund’s obligations to LPs were instantly and accurately recorded, saving time and reducing risk.

Additionally, Ontra’s redlining tool features, including provision comparison and click-through navigation, have improved efficiency while providing investors with a more user-friendly experience.

Insight has significantly reduced the risk of manual errors and enhanced Park Square Capital’s audit readiness. With a digital trail of MFN elections and obligations, the firm is well-positioned for regulatory reviews.

“If a regulator audits us, we want everything in as close to perfect order as possible. Insight helps ensure that,” affirmed Adam Morrison, Park Square Capital.

Insight’s digital MFN functionality output has become vital to Park Square Capital’s daily operations. It gives the team visibility into past side letters, enabling them to verify the terms an LP agreed to — a critical reference and starting point for negotiations during the next fund vintage.

“Digital MFN is efficient and modern. I prefer digital processes and automation to the paper method. I think the majority of limited partners agree, and we will see a trend of moving more processes online going forward,” asserted Adam Morrison, Park Square Capital.

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