Due Diligence Matters – May 2023 Bulletin

perfORM Due Diligence Services is an award-winning, multijurisdictional Operational Due Diligence solutions provider with 90+ years of collective ODD experience. 

Upcoming events

To supplement our commentary around the use of the technology in ODD (below), please click here to register for a 21st June webinar (alongside Dasseti).

We are delighted to be partnering with Juniper Place, a leading investor intelligence business with strong links into the family office community and who are currently building momentum in the digital asset space. On 25th May we are co-sponsoring, alongside Juniper Place, a digital asset event featuring a number of institutional grade crypto managers who are also ODD Report Solution clients.

Investment Manager ODD Report Solution Clients

Our ODD Report Solution is not just another tick in a box, it is a new approach to operational due diligence. A pragmatic solution for Investment Managers and Service Providers which engage us to complete an ODD review.

We target a 6-week turnaround, and our ODD process is significantly less onerous and time consuming compared to a data-heavy, sample-based controls audit. Clients need only allow for interviews with key staff and document provision. In addition to the below, we currently have five clients in progress.

  • Virtual Asset Service Provider: Copper Technologies (Switzerland) AG – please contact Adam Groom to request access to our March 2023 dated ODD Report.
  • Investment Manager: Old Street Digital Limited – please contact Paul Ridley to request access to our April 2023 dated ODD Report.

How we are using technology to enable ODD

We are constantly exploring how technology can add to the ODD process, unlock valuable insights from vast amounts of data, and enhance our risk analysis capabilities. The idea is for technology to complement and support our ODD process rather than replace it: we remain a team of experienced, multijurisdictional ODDers committed to practical client solutions, albeit increasingly tech-enabled.

In late 2022, we made the decision to partner with Dasseti, a fully online due diligence platform built for the needs of the investment industry. The inputting and assessment of DDQs is now built into an online workflow which connects us to target firms as well as clients. Target firms benefit from an easy-to-use interface with several features to save time: strategy-specific questionnaires; core sets of questions that are expanded depending on relevance; and document upload.

We can now easily maintain the large population of questions and DDQ designs that collectively form our ‘ODD brain’ and ensure it stays abreast of a constantly changing risk environment and evolves to meet our diverse client needs. For example, we have recently expanded our due diligence coverage to M&A targets and, having all our DDQs digitised in one place, enabled us to quickly iterate and design new scope DDQs that are relevant and tailored to the target firms for acquisition.

For those clients looking to monitor their investments with a lighter touch, cost-effective outsource or co-source solution, our digitalised DDQs allow for efficient data gathering and clients have access to reports, data analysis, progress updates real time. The solution also allows for internal ODD teams to focus on more demanding work activities, such as in-depth, new target firm reviews in the knowledge that their existing investments are being appropriately overseen.

On the data side, our DDQ responses become part of a large data repository that can yield various insights and give a quick read on key trends, such as fund exposures to certain banking providers. In addition, the database feeds our ODD reports with certain basic information thus freeing up time to focus on assessing the risks.

Furthermore, and accessible through our new website, clients can access their research and data through a portal that is customisable to suit their preferences.

Finally, it’s only fitting to mention the exciting potential of generative AI, like ChatGPT, and its influence on ODD. Large Language Models (LLMs), such as ChatGPT, have the potential to transform the way we absorb and subjectively assess large amounts of written information. We’re actively exploring the possibilities of this technology within our industry to harness its immense potential, but it requires careful assessment versus the risks. For example, given the sensitivity and confidentiality of the information involved in ODD reviews, as well as the cloud-based nature of these models, explicit permission would be needed to upload any proprietary information to ChatGPT, or any other platform. Furthermore, while these models generate highly plausible and well-written responses, occasional “hallucinations” remain a concern.