Operational Due Diligence
July 22, 2026
The Systems Behind the Strategy
Strong operations support strong investment outcomes.
A compelling investment strategy relies on more than investment expertise. It also depends on the operational infrastructure that enables consistent execution, effective oversight, and investor transparency. From governance and valuation practices to compliance, cybersecurity, and reporting, a manager’s operational capabilities help reduce risk and reinforce confidence. Because operational failures can have lasting consequences, this area deserves its own disciplined review.
Consider these key questions:
- Service providers. Who are the auditor, administrator, custodian and legal counsel? Are they recognized institutional providers, and how long have they served the manager?
- Valuation policy. How are illiquid positions valued, by whom and how often? Is valuation independent from the investment team?
- Compliance and regulatory posture. What is the regulatory history of the firm and its principals? Are policies, including personal trading, conflicts of interest and trade allocation clearly documented and enforced?
- Cybersecurity and business continuity. Are systems independently tested? Are there documented disaster recovery and business continuity protocols?
- Reporting and transparency. What does standard LP reporting look like? Frequency, depth and timeliness and how does the manager handle ad hoc requests?
