The SEC recently adopted amendments to Rule 206(4)‑1 under the Investment Advisers Act of 1940 to update rules governing investment advisers’ advertising and solicitation practices (Marketing Rule). Among other measures, the Marketing Rule will affect how managers approach the process, documentation and disclosure involved in building non-standard track records that are not based on audited financials (e.g., extracted performance; model-based, backtested performance; etc.). There are, however, a number of common deficiencies associated with the preparation of performance calculations that have long predated the release of the Marketing Rule and are not addressed therein. As PE firms of all sizes retrofit their operational practices to account for necessary changes under the Marketing Rule, they should also audit their other existing practices to identify and remedy any other deficiencies. To assist managers with this process, the Private Equity Law Report interviewed a number of attorneys and CCOs on common operational issues with performance calculations. This first article in a three-part series explores typical process deficiencies when creating non-standard track records and strategies for overcoming them. The second article will delve into recordkeeping and disclosure deficiencies. The third article will discuss ways sponsors typically discover operational deficiencies, steps for upgrading controls (e.g., the time and costs involved) and the Marketing Rule’s effect on those processes. See “Correcting Alpha: Practical Steps Investors Can Follow to Diligence Flawed IRR Calculations (Part Two of Two)” (Nov. 19, 2019).