Re-Up Risk Assessment

Re-Up Risk Assessment is the structured process allocators use to decide whether to recommit to a manager in a subsequent fund. Re-ups are rarely automatic. Even strong returns can hide fragile process, style drift, governance issues, or team instability. Conversely, modest performance in a difficult market can still earn a re-up if discipline and transparency are strong.

For allocators, re-up decisions are reputation decisions. They reflect whether the allocator’s original underwriting holds under real outcomes, not just forecasted narratives.

How allocators define re-up risk drivers

Allocators evaluate re-up risk through:

• Performance quality: attribution, dispersion, and repeatability of edge
• Underwriting consistency: whether deals match stated strategy
• Portfolio construction: concentration, reserves discipline, pacing behavior
• Team stability: retention, role clarity, succession, incentives
• Governance behavior: transparency, conflicts, side letters, fee practices
• Down-cycle conduct: write-down discipline, loss triage, communication
• Operational maturity: reporting quality, controls, responsiveness

Allocator framing:
“Did the manager behave like they said they would—especially when it was hard?”

Where re-up risk is highest

• managers with strong headline returns but weak attribution clarity
• strategies where mark-to-model can obscure quality
• funds with key person dependence or platform instability
• managers that stretched mandate or changed behavior under stress

How re-up assessment changes outcomes

Strong re-up discipline:

• improves program quality over time
• reduces adverse selection and performance chasing
• strengthens governance credibility internally
• increases portfolio resilience across cycles

Weak re-up discipline:

• locks in managers for narrative rather than evidence
• increases exposure to style drift and platform risk
• produces regret-driven churn later
• undermines internal trust in manager selection

How allocators evaluate re-up discipline

Conviction increases when allocators:

• compare underwriting vs realized behavior explicitly
• evaluate attribution and process, not just IRR
• stress-test team stability and incentives
• review governance and transparency across the fund life
• document lessons learned and feed them into future selection

What slows re-up decision-making

• unclear attribution and inconsistent performance reporting
• unresolved governance disputes or side letter complexity
• weak communication about losses and write-downs
• unclear team changes and succession planning
• lack of consistent monitoring data over the fund life

Common misconceptions

• “Re-ups are easier” → they can be harder because reality is visible.
• “Strong IRR means re-up” → IRR can be timing and mark-driven.
• “If they raised before, they’re stable” → platform stability can deteriorate.

Key allocator questions during diligence

• How did realized behavior compare to the original underwriting?
• What changed in team, process, or incentives since last fund?
• What does attribution show about repeatability?
• How were losses handled and communicated?
• Are governance and economics consistent and defensible?