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Private Equity Operational Due Diligence, Website: Tools to Evaluate Liquidity, Valuation, and Documentation Hardcover – April 10, 2012
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"An interactive guide for investors that explains what they should be looking for from private equity funds before they invest." (Opalesque, September 3, 2012)
From the Inside Flap
Private Equity Operational Due Diligence: Tools to Evaluate Liquidity, Valuation, and Documentation
Though not as prevalent as hedge funds, lucrative private equity and real estate funds handle billions of dollars versus hedge funds' millions. Because of the vast amount of money invested in these funds, it is imperative that investors perform operational due diligence. Written to persuade Limited Partners once and for all of the benefits of performing and maintaining a robust operational due diligence program, Private Equity Operational Due Diligence arms you with the tools to develop detailed, agile, comprehensive, and ongoing operational due diligence reviews.
Addressing the unique aspects and challenges associated with private funds, author Jason Scharfman shares his decades of experience performing due diligence on the non-investment (i.e., operational or business) risks associated with private equity and real estate funds. Beginning with a brief history of operational risk coupled with the unique aspects of operational due diligence on private equity funds, Private Equity Operational Due Diligence analyzes the approaches to valuation, legal, and financial statement risks. User-friendly flag icons throughout the text highlight key operational risk areas and deficiencies that have historically tended to signal larger problems.
In this step-by-step guide, you'll discover:
Operational risk compared to operational due diligence
Understanding the goals of the operational due diligence process
Designing an operational due diligence program for private equity
Key risk consideration areas
Cash management and controls
Business continuity and disaster recovery
Valuation committee review scope
Operational due diligence specialists versus generalists
Trends in indemnification and exculpation clauses
Fraud considerations: mortgage fraud and straw man borrowers
Evolution of Minimum Operational Risk Regime (MORR)
Ongoing fund monitoring techniques
Private equity fund advisory boards
Different types of advisory boards: Limited Partners versus Pure Advisors
Case studies and scenarios
Trends and future developments
Use of third-party administrators
Impact of Dodd-Frank on operational due diligence
A companion website includes sample checklists and templates to assist with the techniques outlined in the book, including spreadsheets for financial statement analysis and legal document analysis, as well as links to various laws and regulations.
It's time to give operational due diligence its due respect with Private Equity Operational Due Diligence.
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Author of The Vigilant Investor[
[ASIN:0814417507 The Vigilant Investor: A Former SEC Enforcer Reveals How to Fraud-Proof Your Investments]]
what they were doing about operations. Scharfman outlines both how not all General Partners
have best operational practices. While only a handful of private equity funds may be frauds
investors still have to evaluate the quality of fund operations. This book outlines some key
considerations to perform due diligence on including back office trade operations, and service
providers. I also thought the guidance on valuation approaches was very helpful. A good read.
operational issues covered. They don't - and this book shows not only how to evaluate the
quality of General Partner's operations but also how to determine how well they keep their eye on the
ball. The author is spot on about the importance of over performing due diligence on
valuation procedures and the book has a good overview of different approaches on this.
hadn't thought of how operational due diligence similarities are present among different asset
classes like hedge funds, real estate and private equity. This book raises some good points
about this and shows the similarities and differences among each. If you don't think that this
type of work is important, Limited Partners should read the case studies in fraud.