Closed-end Fund Operational Due Diligence Masters Level Certificate Course

This Certificate is comprised of multiple sessions; you can choose to take the full Certificate or just the session relevant to your career. Sessions do not need to be taken in order.

This program focuses on mastering the skills and knowledge the institutional investor, fund managers, and service providers need to effectively perform due diligence on the non-investment risks associated with Private Equity funds, Private Credit funds, Real Estate Funds, and VC funds to develop a comprehensive operational due diligence program. This interactive, workshop-style class will provide you opportunities to engage in exercises and case study scenarios to help you master these tasks.

Each day will begin at 8:30 am with registration and coffee, tea and a light breakfast will be supplied. This is a great time to meet the instructor and your fellow attendees. The program will start promptly at 9 am, though we may conclude earlier, please plan to stay until 5 pm each day. Lunch will be provided and dress is smart casual.

This is an intimate class to ensure you get direct attention and the best result, so bring your questions and be ready to share your experiences.

 

This Master level Certificate comprises the following sessions:

 

Class 1 – Preparing for a Closed-end Fund Operational Due Diligence Review (2 – Days)

 

Class 2 – Conducting Onsite Operational Due Diligence on a fund (2 – Days)

 

In order to earn a Certificate, you must complete all core classes.

 

Prerequisite knowledge:

  • Participants should have an understanding of Private Equity Due Diligence at the fundamentals level before taking this Master level course, including:
    • A deep and thorough background in the financial markets and securities
    • A complete understanding of financial products including; hedge funds, private equity and separate account platforms
    • Strong knowledge and experience working with financial statements
    • Knowledge and understanding of investment strategies

 

Curriculum

Class 1: Preparing for an Operational Due Diligence Review

Lectures and hands on review of fund documents and materials. Attendees will work in groups to dissect and evaluate offering documents, regulatory filings and marketing material in addition to reviewing due diligence questionnaires and fund management information in order to be properly prepared to conduct an onsite due diligence meeting.

Day 1: Obtain and synthesize relevant materials and prepare for the onsite review

Module 1: Welcome / Introductions

Module 2: PE ODD Process Review

  • Fast-paced review of the Private Equity Operational Due Diligence process. The module will be comprehensive in nature and a brief refresher.

Module 3: Exercise – Preparing for Due Diligence Onsite Review

  • Steps and tasks to prepare for the Onsite Meeting
  • Exercise #2 – Planning the ODD Project
  • Review typical and atypical LPAs
  • Identify Fees & Expenses in Private Equity structures
  • Review the Private Placement Memorandum (PPM)

Module 4: Identify Relevant Materials

  • Review the process for requesting documentation
  • Negotiating for required documents
  • Review documents for “red flags” to identify potential operational risk
  • Prepare materials for Operational Due Diligence

Module 5: LPA / Waterfall review

  • Describe the Waterfall structure
  • Differentiate between Traditional and Non-traditional structure / European vs American Carry
  • Discuss Cash Flows and Controls

Module 5A: Exercise – Build a Waterfall / Run Cashflows

  • Exercise #3 – Build a waterfall for your PE Fund
  • Run a cash flow through your waterfall
  • Evaluate your fund

Module 6: Synthesize materials and create onsite agenda

  • Create summary and agenda for onsite review
  • Review the Operational Due Diligence Preparation
  • Summarize the data collected in your case studies

Module 1: Review Due Diligence Preparation

  • A quick review of the preparations for the PE ODD Onsite from Day 1
  • Review of the ODD Process
  • Identify next steps

Module 2: Plan to execute the agenda

  • Identify skills needed to execute the agenda / facilitate the onsite meeting
  • Demonstrate effective interview techniques
  • Utilize appropriate question types for the type of information needed during the onsite meeting

Module 3: Review and verification of compliance and regulatory matters

  • A review of various tools and forms available for compliance reviews
  • Identifying Red Flags and non-disclosed matters
  • Conducting a Background Search (Registered entities, political contributions, registered reps)
  • Foreign Regulatory search tools

Module 4: Audited financial reviews and verification

  • Breaking down a fund’s audited financial statements
  • Consistency on expenses between the LPA, and the PPM / Red flags
  • Valuation considerations, standards, and guidelines

Module 5: Exercises

  • Experiential group activities to practice skills and tasks for preparing for the onsite meeting

Module 6: Comprehensive review / What If Scenarios

  • Experiential group activities to review course material and provide “what if: scenarios to practice and prepare for your most challenging situations in preparing to PE Operational Due Diligence

 

Class 2: Conducting Operational Due Diligence

Attendees will experience an onsite due diligence meeting through a unique partnership created by the IMDDA and investment managers. This hands-on learning exercise will allow students to ask questions, gather information and experience due diligence in action by learning about risk, infrastructure, investment style and strategy and management controls.

Day 1: Evaluate Investment management firm, Human capital, 3rd party service providers, and Counterparties

Module 1 – Preparing for the Onsite Meeting – a quick review

This module is a fast paced review of the IMDDA’s Master Class – Preparing for the Onsite ODD Meeting. The module will be comprehensive in nature and a brief refresher course.

Module 2  What are you trying to achieve during the onsite meeting? – Evaluating Performance and Risk

  • On site agenda
  • Strategy benchmarking and analysis
  • Interactive case studies

Module 3 – Investor Relations your first point of contact: Understanding the Fund Terms

  • Key items to be learned from the firm’s sales team. Keeping in mind that the IR/Business Development team are typically sales people looking to please investors, and prospective investors, there is often much ODD can learn about the entire firm from the first interview.
  • The Fund’s metrics, AUM, history and culture
  • Fund Seeding, Acceleration, Funds of One, Managed Accounts
  • Internal Capital, Ownership
  • Red Flags

Module – The art of the on-site interview – workshop

  • Interview Guide – What to ask, when to ask and how to ask
  • Data Triangulation – Looking for different answers to the same questions
  • Lie Spotting
  • Body Language

Day 2: Evaluate Compliance programs and the regulatory environment, Vehicle structure and terms, and Technology infrastructure

Recap Day One Q&A session

Module 5 – The COO: Infrastructure and Controls

  • Evaluating fund manager infrastructure and governance
  • Internal Controls and Procedures
  • Counterparties and Service Providers
  • E&O/D&O Insurance and Indemnification

Module 6A – The CFO/Controller: Collateral Management

  • Fund counterparties – are they a good fit for the strategy?
  • The use of regional custodians and unintended risks
  • How does the fund monitor its collateral?
  • Cash, Collateral, and Counterparty Management

Module 6B – The CFO/Controller: Cash Controls and Valuation

  • Cash Controls, systems,
  • Fraud, theft, and malfeasance
  • Case Studies

Module 7 – The CCO: Verifying the Culture of Compliance

  • Compliance and regulatory reviews
  • Service Provider verification and challenges
  • Understanding an SEC Deficiency Letter
  • Compliance and Cyber Technology

Module 8 – The CTOUnderstanding IT/BCP, Cybersecurity

What you'll learn
Who should take this