Operational Due Diligence in Private Equity: A Practitioner's Guide to Assessing Managers, Mitigating Risk, and Building an Institutional ODD Program

The losses that end funds are operational, not investment.Most funds that fail do not fail because someone picked the wrong deal. They fail because of how the fund was run: commingled cash, unchecked valuations, an overwhelmed finance function, a service provider that existed only on paper. Operational due diligence is the discipline that finds these problems before they cost investors everything. This is a complete, practical guide to the work allocators do when they look past the track record.Who this book is for- ODD analysts and the investment teams they work beside- Fund-of-funds and consultant staff, and family offices- Fund managers, CFOs and COOs who must satisfy the reviewers- Professionals entering the field, and heads of programs sharpening one they already runWhy averaging is dangerous, measuredThe book builds the rating model it recommends and runs twelve managers through it. A manager with no independent custody of assets averages 1.500 and receives the top rating; an ordinary manager with no fatal flaw averages 2.250. Three of twelve managers carry a terminal flaw and all three are approved. Re-weighting the domains changes zero decisions; adding veto rules changes five. And refining the rubric from eight domains to sixteen makes a fatal flaw easier to hide, not harder.Across fifteen focused chapters, you will learn how to- Build a repeatable review framework and rating model- Assess firm ownership, governance and key-person risk- Read fund legal documents and expense practices with an operational eye- Evaluate the finance function, administration, custody and cash controls- Test valuation governance in illiquid assets- Scrutinize auditors, compliance, cybersecurity and business continuity- Run an on-site visit, write the report and monitor the manager over timeTools includedA master questionnaire of core requests, an operational red-flag register that pairs each warning sign with the reason it matters, a 30/60/90-day plan for a new ODD analyst, and a glossary.Part of The Private Markets Career Guides. Read next: The Private Markets Limited Partner, The Private Markets Valuation Specialist, The Private Equity Fund Controller Playbook.Educational content. All examples are fictional; not investment advice.