Due Diligence Matters November 2025: Importance of Verification in Due Diligence
perfORM is an award-winning, international (UK, Switzerland, USA and UAE) and standalone Operational Due Diligence solutions provider with 150+ years of collective ODD experience.
Almost 175 operational due diligence reviews have been completed in 2025.
The ‘ORM’ in perfORM stands for Operational Risk Mitigation. Please contact us if you would like to discuss our services, or to receive sample ODD Reports, thank you.
Avoiding financial loss – simple verification
Verification is a fundamental aspect of due diligence procedures that adhere to industry best practices. In previous communications we have emphasised the necessity of verifying information supplied by investment managers prior to committing funds. For allocators, making decisions based largely on projected future outcomes – such as anticipated returns within defined investment parameters – without validating the underlying information, increases the risk of exposure to unforeseen, non-investment-related risks and potential irrecoverable losses. Unlike market drawdowns, from which recovery may be possible, losses from fraud or misleading information could result in permanent capital impairment. Operational due diligence seeks to mitigate these risks and safeguard investor interests before an investment decision is made.
What are the chances?
The likelihood depends on numerous factors. However, when an allocator makes multiple investments over several years, it is almost certain that at least one will present significant challenges. Our responsibility is to identify these risks and assess the effectiveness of the measures put in place to mitigate them, one of which is third party verification.
Example: verification exposed irregularities
Earlier this year, through diligent verification procedures, we prevented our client from proceeding with an investment that could have resulted in significant financial loss, considerable management time spent on rectification, and reputational damage.
While maintaining confidentiality in the matter, it was the verification process we undertook with the fund’s administrator that identified inconsistencies within the portfolio across several communications. For this investment strategy, we anticipated the following:
|
Anticipated outcome |
Actual outcome |
|
100% of the portfolio independently valued by the administrator |
Only approximately 30% of the NAV was independently priced |
|
10% position limit |
Top two positions accounted for 70% of the portfolio |
|
90% of the portfolio to be liquidated in 2 days under normal market conditions |
Significantly longer liquidity times |
The fund now faces significant liquidity difficulties and investors have been left reeling. For our client, avoiding this calamity was a huge relief. This case highlights the critical role of thorough verification in safeguarding investor interests and upholding industry standards.
The key message: just as you would always fasten your seat belt before driving, always conduct thorough operational due diligence before investing.
ODD Report Solution
Our ODD Report Solution is not just another tick in a box, it is a fast growing and innovative approach to operational due diligence. A pragmatic solution for Investment Managers and Service Providers which engage us to complete an ODD review.
“We believe in operational excellence, doing things ‘the right way’ and holding ourselves accountable for delivering institutional-grade asset management. Working with perfORM to review our processes thoroughly is key to ensuring our investors have independent insight, understanding, and confidence in how we manage their assets. We appreciate the perfORM team’s forensic review of our documentation and processes and look forward to collaborating again” – Investment Manager ODD Report Solution client
Investment Manager: Redhedge Asset Management, LLP – please contact here to request access to our July 2025 dated ODD Report.
Investment Manager: Copper Technologies (Switzerland) AG – please contact here to request access to our June 2025 dated ODD Report.
Investment Manager: Hyperion Decimus, LLC – please contact here to request access to our June 2025 dated ODD Report.
Investment Manager: MNNC Advisors (Cayman) SEZC – please contact here to request access to our June 2025 dated ODD Report.
Investment Manager: GrandLine Investment Management Ltd – please contact here to request access to our March 2025 dated ODD Report
Investment Manager: Spectra Capital, LLC – please contact here to request access to our March 2025 dated ODD Report
Investment Manager: Gemcorp Capital Management Limited – please contact here to request access to our January and March 2025 dated ODD Reports
Investment Manager: Hivemind Capital Partners UK LLP – please contact here to request access to our January and April 2025 dated ODD Reports
Investment Manager: 24 Capital Management Ltd – please contact here to request access to our December 2024 dated ODD Report
Investment Manager: MARK Capital Management LP – please contact here to request access to our December 2024 dated ODD Report – UNDERGOING RENEWAL PROCESS
Investment Manager: Edge Capital Investment Management, LLC – please contact here to request access to our September 2024 dated ODD Report. UNDERGOING ANNUAL RENEWAL PROCESS
Investment Manager: Fasanara Capital Limited – please contact here to request access to our July 2024 dated ODD Report – UNDERGOING RENEWAL PROCESS
Investment Manager: Eltican Asset Management SAS – please contact here to request access to our July 2024 dated ODD Report
Investment Manager: Coral Cove Capital Ltd – please contact here to request access to our January 2024 dated ODD Report