Continuing to perfORM

This year marks the 5th anniversary since perfORM Due Diligence Services was founded – and two and a half years since it became a JTC Group company. Here, Quentin Thom, co-founder and co-head of perfORM, discusses how the business has continued to evolve in line with global trends, and what’s on the horizon…

Q: It’s two and a half years since perfORM became part of JTC. Across your service offerings, what trends have you seen?

Quentin Thom (QT): Our core ‘on-demand’ operational due diligence (ODD) proposition continues to find favour amongst the alternative investment management community though we have seen growth across all our (ODD) service offerings. When we launched over four years ago, we were perhaps seen as a bit of a positive disruptor to the market that was, up to then, dominated by large investment consultants who were offering portfolio construction, investment research and, often, ODD report databases.

We quickly learnt that non-ODD offerings were not always what the allocator (i.e., investor / LP) wanted – sometimes, they only wanted the ODD part. So, our practitioner-led ODD proposition found favour very quickly. The allocators – our core client base – like that our growing team has also largely come from that side, so truly understand the entire manager selection process. And they like that we offer value-for-money on-demand ODD style support with no subscription or platform fees. 

Our successful journey has been supercharged since joining the JTC family two and a half years ago. We offer the benefit of a flexible, nimble service led by a team with more than 100 years of combined experience in ODD whilst supported and backed by a FTSE 250 listed parent company.

It’s a good balance that has enabled us to continue to grow over the past few years under our own direction and remain attractive – it’s no accident that, so far this year, 75% of business comes from existing relationships.

Q: How important is the relationship with JTC?

QT: We’ve deliberately kept ourselves distinct and separate from JTC since coming together in October 2021 – different systems and decentralised working, for example. That’s important to our integrity and data management – it’s meant we’ve been able to be absolutely independent from JTC’s other businesses. 

What’s been interesting though is that we’ve also been able to support JTC itself as it has grown and evolved its own propositions. We have a few instances, for example, where we’ve worked for JTC businesses, as the client, or where we’ve conducted ODD on behalf of JTC supporting its M&A activities.

Q: Are there any areas where you’re seeing particular growth?

QT: We’re definitely seeing more demand within real estate, infrastructure, and more recently in the world of venture capital. This is quite interesting (and requires a sensible approach) because venture capital, unlike private equity or hedge, is starting to deploy more institutional style ODD in their research and selection process.

Q: What else has changed for you? Have you brought new services to market?

QT: We’ve sought to build on our core proposition and pursue a ‘liberation concept’ – unleashing what ODD can do beyond its traditional manager/fund due diligence. Our approach has been to find firms that maybe haven’t had access to our sort of skill set before and demonstrate what it can do for their business. 

An example of that has been our ODD therapy, where we’ve worked with managers who now benefit from some pre-emptive or readiness work – a sort of mock institutional ODD review process. From their point of view, it is inevitable that some sort of ODD analysis is going to be done on them at some point, so actually it’s beneficial for them to understand how they can put themselves in a good position early on. It’s an evolution of our business that’s been well received.

Q: Does technology continue to be a key part of your proposition?

QT: perfORM is supported by technology but we’ve always maintained this augments our human expertise. In fact, we opted for a technology platform that is deliberately highly customisable, because we understand that our clients value the flexibility and tailored ODD approach we offer. We use technology like a data repository and a brain. It holds all of our work, our methodology, our templates, and it is capable of ensuring everything can be tailored and nurtured.

But people power and expertise are still critical. For instance, for background checks, we use an AI-driven tool. It helps to capture databases and adverse media news flows and impressively navigates public information to provide outputs on individuals or entities. It can’t, though, do 100% of the job. That sort of work requires a ‘human overlay’ to analyse data and pull together an accurate, well-written and holistic narrative.

Q: So what comes next?

QT: The allocator community remains the mainstay of our business, so as we look to evolve further, it’s important for us to be identifying what the investment manager community is likely to consider next. Some of that is driven by regulation. Investors are increasingly, for example, scrutinising their service providers, asking more questions and looking for evidence that those service providers really are doing what they say they are doing, and demonstrating good oversight to their regulators.

That gives us cause to consider a number of things. One is an ODD Report solution – it’s an innovative product for investment managers, where we come in as a third party to undertake comprehensive ODD. It’s like a sort of hygiene rating – an ODD report that a manager can send to clients and prospects. It’s a good solution for those managers who want to demonstrate transparency and aim for best practice.

We’ve also just launched our new Due Diligence Clinic. We realise that sometimes, people just want to have a bit of a confidential chat about a specific issue. It could be an allocator, it could be an investment manager, it could be a service provider. Really anyone can book in a confidential, half hour consultation, free of charge with no obligations. Our hope is it gives us a chance to be able to show we can do to help them – but it’s also an opportunity to champion what ODD can do for them more widely.

The great thing about ODD is that our world is constantly changing. Due diligence plays an important role in enabling investment markets to function robustly – and I’m in no doubt that we’ll continue to see our proposition evolve further over the coming five years.