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Due Diligence Matters - December 2023

ODD Considerations

perfORM has completed around 120 ODD reviews in 2023. These have been across a wide range of businesses, including hedge fund managers across all strategies, PE/RE/VC firms, administrators and software providers, on behalf of an equally broad range of allocators. 

In performing our work we have experienced a significant variance in the preparedness of target companies for ODD. Below are some of the key considerations that can be applied across all the businesses we have worked with, to assist in streamlining the ODD process:

  • Have a detailed, up-to-date, DDQ.
  • Ensure that information in the DDQ is consistent with other documents. Often, for example, the number of staff disclosed in the DDQ is inconsistent with the organisational chart.
  • Review documents and policies in line with the stated frequency. If the compliance manual is stated as being reviewed annually, ensure that this is the case, and that the date on the manual has been updated to reflect this, or include a version control table. The same applies for the business continuity policy, WISP etc. If the document has been reviewed and no changes have been found to be required, the date or version control table should still be updated to reflect this.
  • Prepare service providers, particularly (for fund managers) the fund administrator, for the fact that we are likely to contact them. We are often held up by not being able to independently verify critical relationships and processes on a timely basis
  • Have a clearly defined cash wire process and, ideally, include it in the DDQ. This process should include the administrator, iNED, or another independent third party, from an operational risk perspective. Specify who the signatories are and in what combination they can enter and authorise wires. We will verify this with the third party, and we frequently find discrepancies in the described process, which holds up completion of the ODD and can raise a red flag, since poor controls in this area present a significant risk across all businesses
  • Be clear on who is responsible for information security, the level of information security risk faced, how this risk level has been arrived at and how it is mitigated. While the controls in place will vary significantly depending on the nature of the business under review, the number of employees, the use of third-party vendors and so on, it is critical that a risk assessment has been performed 
  • Be prepared to share your compliance manual/code of ethics/code of conduct. Prospective allocators strongly prefer us to have reviewed and assessed all compliance documentation. 

perfORM can help with the above via ODD Therapy or our progressive ODD Report Solution.

ODD Report Solution

Our ODD Report Solution is not just another tick in a box, it is an innovative approach to operational due diligence. A pragmatic solution for Investment Managers and Service Providers which engage us to complete an ODD review. In addition to the below, we currently have a growing number of clients in progress.

  • Investment Manager: MARK Capital Management LP – please contact here to request access to our November 2023 dated ODD Report
  • Investment Manager: Wincent Capital Management Limited – please contact here to request access to our September 2023 dated ODD Report
  • Investment Manager: Hivemind Capital Partners UK LLP – please contact here to request access to our September 2023 dated ODD Report
  • Digital Asset Service Provider: Cloudwall Capital, Inc – please contact here to request access to our August 2023 dated ODD Report
  • Investment Manager: Old Street Digital Limited – please contact here to request access to our April 2023 dated ODD Report
  • Digital Asset Service Provider: Copper Technologies (Switzerland) AG – please contact here to request access to our March 2023 dated ODD Report
  • Investment Manager: Hyperion Decimus, LLC – please contact here to request access to our March 2023 dated ODD Report

About perfORM

perfORM Due Diligence Services is an award-winning, multijurisdictional (UK, Switzerland, USA) and standalone Operational Due Diligence solutions provider with 100+ years of collective ODD experience.

Please contact us to discuss how we might be of support in 2024, for more information, or to receive a sample ODD Report. Please note we have a large coverage of ODD Reports that can be accessed off the shelf, without any subscription fees

Missed the last e-bulletin? Click here for the November 2023 edition.