January 5, 2013
Interviewed by: David Snow
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Deal Story: Ultimus Fund Solutions

Mitchell Hollin of LLR Partners discusses the financial-services provider, Ultimus Fund Solutions.

Mitchell Hollin of LLR Partners discusses the financial-services provider, Ultimus Fund Solutions.

Hollin:  So Ultimus is a financial services company. It provides back office accounting and administrative services to the mutual fund industry. So that basically as a mutual fund operator typically they’re most focused on how they can improve their investment performance, what stocks to pick, or what investment strategies to pursue. What Ultimus does is everything else for that mutual fund except for those investment decisions. So they’ll handle all the shareholder services. They’ll do all the accounting and administrative support in support of that mutual fund. It’s an industry that has been around-, has grown a lot, especially as people are much more focused on transparency of reporting. But it’s also an industry that’s gone through a lot of consolidation. And if you look at the major players in that space there are names like State Street or Bank of New York. And as a result of that there’s really been a consolidation among the smaller independent providers of these administrative services to the mutual fund industry.

Ultimus today is the largest privately held remaining independent player in the space. And we saw a very high quality provider that we thought was very well positioned to take advantage of the dislocations that have occurred in the marketplace because of that consolidation. And because of that consolidation the big players are focused on servicing the big mutual fund industry. Whereas they’re less interested in servicing that small to medium sized mutual fund client, which is really the bread and butter of what Ultimus does. So they’ve been doing that for the last 12 years and so the investment thesis is that we could take advantage of that dislocation that’s occurred as a result of the consolidation by our bigger competitors.

What changes do you expect to make with the company?

Hollin:  Well, we want to continue to maintain the very high quality service that the company is known for and respected for. But the area that we really are most focused on is sort of a hidden gem. It’s a brand that very few people outside of their client base know. And so a big part of our effort is spent on business development and developing our presence within the marketplace beyond our existing client base. And part of that is also the recruitment of a business development organization that can do everything from the basic of assembling a CRM system and identifying prospects, to literally going out and pitching new business and identifying the best prospects for the services that we provide. And so in the several months that we’ve owned the investment we’ve recruited in a business development team to go and do that, developed a sales and marketing presence. And that really will be the primary emphasis over the next few years, while maintaining the high quality standards that Ultimus clients are used to.

What challenges do you face?

Hollin: Well, it is a sector that, while it’s a very attractive sector where you keep clients for a very long period of time because you become so integrated in what it is they do, but that same level of integration also makes it very difficult to win new clients. And so that really means that you need to present a very significant value proposition for that client to want to make that change and go through the pain and agony that’s required in order to change service providers like what Ultimus does.



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