It is highly recommended that a hedge fund consulting firm with experience in organizing domestic and offshore funds be hired prior to beginning the process of establishing a new hedge fund. In addition to overseeing the entire process to ensure that all of the tasks are completed properly and timely. An experienced consulting firm can retain the most qualified professionals with proven track records. Use of a hedge fund consulting firm could save the fund manager as much as 40% off the organizational costs of the funds.

Fund Administrators are service providers that offer back office accounting and operational support for hedge fund managers. They complete tasks such as trade reconciliation, financial control functions, accounting, client reporting, and audit preparation. Administration firms provide additional layers of financial security and controls that help protect investor interests and prevent certain types of fraud. What sells many hedge fund managers on using fund administrators is their ability to execute several business processes on behalf of the hedge fund at a reasonable cost relative to the high cost of hiring contract or full time assistance for these same tasks.

An accountant with experience in the field of securities and private offerings will also be an important member of the organizational team. The accountant should have extensive background in domestic and offshore fund accounting and specific experience with private placement documentation. The accountant is responsible for reviewing the fund’s accounting system and procedures. The accountant will prepare the monthly financial statements and reports to fund manager as well as monthly statements to the limited partners.

Hedge fund managers should give strong consideration to domiciling their fund with a prime broker if the fund is intending to trade through multiple brokerage firms. Prime brokers cater to hedge funds by providing consolidated daily reports of all fund activity from all brokers who manage the individual trades. A prime broker can also provide custodial services which then eliminates the need for a third party custodian. A good prime brokerage firm can help boost the credibility of your firm and provide you with business and capital-raising advice as well.