Topic hub
Due diligence
Due diligence is the structured investigation an investor, lender or acquirer carries out before committing capital. This hub covers two kinds: diligence by an investor on a fund manager before committing to a fund, and diligence by a buyer or lender on a company before a transaction.
Manager diligence covers the investment case, including the team and its track record and attribution, and the due diligence questionnaire. Operational due diligence has its own section, together with the functions and service providers it reviews, such as the fund administrator. Deal diligence covers quality of earnings and the other diligence workstreams, followed by underwriting and the investment committee decision.
Not in this hub: the eligibility and financial-crime checks a fund runs on its own investors, which are in Legal, regulatory and tax, and the valuation of holdings, which is in Valuation.
Reference index
Definition:
Due Diligence — Due diligence is the structured investigation an investor, lender or acquirer carries out before committing capital, to verify what it has been told, identify the risks, and decide whether and on what terms to proceed.
Manager due diligence
4 concepts- Track Record
- Track Record Attribution
- Due Diligence Questionnaire (DDQ)
A due diligence questionnaire (DDQ) is a set of written questions, answered by an investment manager and backed by documents, on its firm, strategy, team, track record, fund terms, operations, compliance and ESG, used to assess and compare managers.
- Conflicts of Interest (Fund)
Operational due diligence and service providers
2 conceptsDeal due diligence and underwriting
3 concepts- Quality of Earnings (QoE)
A quality of earnings (QoE) report is a transaction-focused financial due diligence analysis that tests whether a target's reported and adjusted EBITDA reflect sustainable, cash-generating earnings and quantifies normalisation adjustments, working capital and debt-like items.
- Underwriting
- Investment Committee
Methodologies and frameworks
Framework · Version 1.1.0
Institutional LP Manager Due Diligence Framework
A method for LPs to evaluate a private-fund manager before committing: investment due diligence across ten domains, evidence and verification rules, finding severity and decision outcomes, mapping to ILPA DDQ 2.0 and the AIMA DDQ, an operational due diligence gate and a family-office variant.