Introduction to Private Equity: Venture, Growth, LBO and Turn-Around Capital, 2nd Edition

Template 3 (Fund)

DUE DILIGENCE CHECKLIST

Note: this template is for illustration only, and does not replace professional advice in the conception of such documents.

Each limited partner has its own motivations, targets and investment strategy, as well as tax, regulatory and statutory constraints. Due diligence is thus partly common to all limited partners, and also tailored to their specific needs.

Often, for public pension funds and large institutions, this due diligence is formalised into a request for proposal (RFP) or request for expression of interest (RFI). Some general partners exhibit specific features (first time fund manager, emerging fund manager, specific investment strategy according to SRI1 guidelines . . .) which requires complementary questions.

The PPM (see below) provided by the general partner will answer some of the questions. Other questions will be answered by ad hoc requests or interviews. Answers have to be as factual as possible.

Limited partners’ due diligence on private equity fund offerings is organised around four topics:

1. The investment strategy of the general partner

a. Investment strategy, market(s) targeted and competition

i Market opportunity, recent evolution

ii Strategy, differentiating factors

iii Competitive advantage of the fund and fund manager

iv Competition intensity

1. Closest competitors, recent evolution

2. Valuation: evolution and relation to competition

v Risks

1. Risks involved by the strategy

2. Risk management

b.