Due Diligence Questionnaire (DDQ)

A DDQ is the allocator’s standardized questionnaire designed to collect consistent information across managers so diligence is comparable. It covers firm background, strategy, team, track record, risk management, valuation policy, service providers, reporting, compliance, conflicts, and business continuity.

From an allocator perspective, the DDQ is not a formality. It’s a truth test. The most important signal isn’t polish—it’s whether answers are specific, internally consistent, and supported by evidence.

How allocators define DDQ risk drivers

Allocators evaluate DDQs through:

• Internal consistency: strategy ↔ portfolio behavior ↔ risk controls ↔ track record
• Specificity: defined processes, thresholds, and ownership of decisions
• Evidence readiness: ability to provide backup (policies, samples, data)
• Valuation governance: how marks are set, reviewed, challenged
• Conflict clarity: allocations across vehicles, related-party policy
• Reporting capability: what can be delivered, how often, and how reliably
• Control maturity: segregation of duties, cash controls, oversight structure

Allocator framing:
“Does this manager run a real system—or just describe one?”

Where DDQs matter most

• first-time relationships
• emerging managers scaling quickly
• strategies with valuation discretion (VC/growth/real assets)
• multi-vehicle platforms with allocation complexity

How DDQs change outcomes

Strong DDQs:

• accelerate diligence by reducing follow-up loops
• increase IC comfort and ODD efficiency
• lower late-stage “unknown unknowns”
• improve probability of approval

Weak DDQs:

• create repeated cycles of questions and delays
• expose operational immaturity or inconsistency
• increase “soft no” outcomes (drift, no decision)
• trigger stricter terms demands

How allocators evaluate DDQ discipline

Conviction increases when managers:

• provide clear owners for each control area
• include concrete examples and reporting samples
• show consistent policies aligned with asset types
• reconcile statements across DDQ, deck, and data room

What slows allocator decision-making

• marketing language with no process detail
• contradictions across sections
• missing policies or “we can provide later” responses
• inability to provide data that supports performance claims

Common misconceptions

• “DDQ is paperwork” → it’s a gating tool.
• “Short answers are better” → vague answers increase time-to-close.
• “ODD comes later” → DDQ quality predicts ODD outcomes.

Key allocator questions during diligence

• What documentation backs the DDQ responses?
• Who owns valuation, cash controls, and compliance testing?
• What conflicts exist across vehicles and how are they governed?
• What reporting can you deliver reliably—show samples?
• What changed operationally as the firm scaled?