Overview
This proprietary limited company majority-owned by its principals with no parent company or affiliate entities, provides clients with a unique fixed income alternative. A minority stakeholder in the firm supports it by providing many non-investment-related functions under an administrative services agreement. The company has grown significantly during this relationship, and the minority stakeholder is currently undergoing a structural change that will require setting up new agreements.
It engaged Cutter to perform a strategic review to support negotiations.
Cutter Solution
The company sought Cutter’s help to negotiate a new service model with their minority stakeholder and validate its ability to deliver current and future requirements, as they continue to grow. Cutter was asked to define high-level service requirements (leveraging the administrative services agreement) and perform an assessment of the stakeholder's capability compared with other service providers’ standard offerings, including costs. The scope of the work included the following:
- Obtaining the existing rate card, example invoicing, and supporting pricing variables
- Leveraging Cutter’s existing fee database to perform the analysis against comparable rate cards
- Addressing data gaps and validated assumptions to refine the assessment
- Leveraging Cutter’s insights for evolving service propositions and market drivers
Cutter produced a report covering the following:
- Background and industry perspectives on fee models
- Summary of findings of overall rate card compared to low, mid and high range, with insights on discount and other observable market practices
- The company's service requirements against current market models
- Service assessment findings compared with industry best practices and other market model conventions
- Recommendations for operating model improvements
As a result of the Cutter engagement, the client got a clear picture of its current services against leading industry service and fee models and what services are available to support sustainable and scalable global growth and new client types.