On‑Site ODD: Benefits of In‑Person Diligence and Preliminary Steps for Investors to Take (Part One of Three)

Technology is an important adjunct to private fund investments and operations, but the human element continues to loom disproportionately large in operational due diligence (ODD). Institutional investors review voluminous information when conducting ODD, and a year-long courtship is not unusual before making an investment. Much of that information is obtained and reviewed remotely, but many sophisticated investors insist that the ODD process is not complete without an on-site visit. To understand what additional insights investors can glean from on-site ODD visits, the Private Equity Law Report spoke with practitioners working in various phases of the fund investment process. This first article in a three-part series describes, among other things, the general benefits of an on-site review and how to prepare for an on-site visit. The second article will address ways to structure an on-site visit to maximize productivity and the protocol for an on-site visit. The third article will discuss an investor’s options after this type of in-person ODD visit. See “Preparing for and Navigating Operational Due Diligence Reviews by Investors” (Aug. 27, 2019); and “Operational Due Diligence From the Fund Investor Perspective: Deal Breakers, Liquidity, Valuation, Consultants and On-Site Visits” (Apr. 25, 2014).

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