OPERATIONAL DUE DILIGENCE IN THE FIELD OF PRIVATE EQUITY

Many investors will not be directly managing their own private equity funds but instead entrusting capital to a third party to manage on their behalf in a commingled investment vehicle also known as a private equity fund. There are several categories of private equity fund strategies including:

• Venture capital (VC) funds
• Leveraged buyout (LBO) funds
• Mezzanine financing funds
• Distressed debt investing funds
• Crossover funds
• PIPE transactions
• Interval funds
• Real estate funds

In addition to these strategies there also exist private equity fund of funds, which are private equity funds that invest with other private equity funds. This book will provide an overview of the general universal elements of operational due diligence for private equity funds in general and will also pay particular attention to certain of the specific risks associated with different classes of funds just referenced including real estate funds. With an understanding of the basic landscape of private equity fund strategies, we can begin to discuss in greater detail the investor's role in the private equity process.