5 Key Requirements for Private Equity & Hedge Funds to Scale




When you have a private equity or hedge fund, you're more than likely looking for ways to aggressively scale up your operation. And, while "aggressively" can have a negative connotation, it doesn't mean that you are planning on scaling recklessly. From building the right team to creating dependable mid- and back-office operations to creating a diversified portfolio, there are a lot of ways to grow your business in a smart-yet-aggressive manner. So, let's take a moment to talk about the five key requirements for private equity and hedge funds to scale.

Key 1: Build a strong, dependable team

Wanting a strong team and building one are two wholly different monsters. To truly create a team of reliable experts, you'll want strong recruiters who can communicate your needs and filter out everyone but the most optimal candidates. You can also turn to a process-based hiring system. The Criteria Cognitive Aptitude Test (CCAT) is designed to measure a candidate's personal ability to solve problems, understand and apply what they've learned, and think critically. Famously, Jeff Bezos asked Amazon recruiters to consider just three things: do they admire the candidate, will the candidate improve group effectiveness, and could the candidate's individual talents turn him/her into a superstar?

Key 2: Create a strong deal flow using an industry-wide network of relationships

When you're scaling a private equity or hedge fund, you need fingers in every possible pie. In order to build a robust network of industry contacts, you cannot be shy about networking to uncover new contacts while simultaneously working to deepen existing relationships. This means turning to the rolodexes of partners, attending every possible industry event, traveling to industry-specific conferences and more. This is how deals are made, how revenue is driven, and how businesses grow.

Key 3: Scalable mid- and back-office operations

You can't scale the whole without scaling the piece, and mid- and back-office operations are rife with opportunity for scalable improvements. You need software that can do the heavy lifting for you. QuickBooks is primed to minimize your accounting costs. CRM software, like Salesforce, can streamline the process for developing and improving relationships with clients. And, of course, expense management software for allocation and apportionment, such as Resolvr, can save you untold amounts of money and productive hours.

Key 4: The right brand identity

It's far too easy to think of all private equity and hedge funds as doing the same thing. But you're different, and your brand identity needs to make that clear. Your marketing materials need a look and feel that separates you from the rest. Your tag line should clearly-yet-creatively highlight why you stand out. Your business stands for something, and the way you brand yourself can bring clients to your door. And the more clients you have, the more you can scale.

Key 5: A diversified portfolio in both industry and geography

The last thing any private equity or hedge fund needs while trying to grow their business is a shocking hit to their portfolio. The best ones know they can weather unexpected storms by keeping their portfolios diverse. Make sure you spread yourself out along different industries, so that the bursting of one industry's bubble doesn't destroy your business. Likewise, look beyond any single geographical market — one market may fall, but it would be a highly rare occurrence for all of them to tank at the same time.

Contact Information

If expense allocation software (or spend management software) could help your firm, get in touch with us or find out more:

[email protected]


Authored by:

Gary R Markham

Gary R Markham is co-founder and Chief Executive of aXpire fund solutions, which designs, develops and deploys an array of expense management tools. He is an author of many articles, regularly speaks at conferences, panels and symposiums, a Global Director of the Hedge Fund Association, a recent recipient of the Keys to the County of Miami Dade. Gary has over 20 years experience in FinTech, specializing in spend, expense management, vendor and allocation and apportionment software solutions.

Go back