{"product_id":"private-equity-operational-due-diligence-website-isbn-9781118113905","title":"Private Equity Operational Due Diligence, + Website","description":"\u003cb\u003eA step-by-step guide to develop a flexible comprehensive operational due diligence program for private equity and real estate funds\u003c\/b\u003e  \u003cp\u003eAddressing the unique aspects and challenges associated with performing operational due diligence review of both private equity and real estate asset classes, this essential guide provides readers with the tools to develop a flexible comprehensive operational due diligence program for private equity and real estate. It includes techniques for analyzing fund legal documents and financial statements, as well as methods for evaluating operational risks concerning valuation methodologies, pricing documentation and illiquidity concerns.\u003c\/p\u003e \u003cul\u003e \u003cli\u003eCovers topics including fund legal documents and financial statement analysis techniques\u003c\/li\u003e \u003cli\u003eIncludes case studies in operational fraud\u003c\/li\u003e \u003cli\u003eCompanion website includes sample checklists, templates, spreadsheets, and links to laws and regulations referenced in the book\u003c\/li\u003e \u003cli\u003eEquips investors with the tools to evaluate liquidity, valuation, and documentation\u003c\/li\u003e \u003cli\u003eAlso by Jason Scharfman: \u003ci\u003eHedge Fund Operational Due Diligence: Understanding the Risks\u003c\/i\u003e\n\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003eFilled with case studies, this book is required reading for private equity and real estate investors, as well as fund managers and service providers, for performing due diligence on the noninvestment risks associated with private equity and real estate funds.\u003c\/p\u003e \u003cp\u003ePreface xiii\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 Introduction to Private Equity Operational Risk 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction to Operational Risk 1\u003c\/p\u003e \u003cp\u003eOperational Risk Compared to Operational Due Diligence 3\u003c\/p\u003e \u003cp\u003eWhat Is Operational Due Diligence? 4\u003c\/p\u003e \u003cp\u003eOperational Due Diligence in the Field of Private Equity 8\u003c\/p\u003e \u003cp\u003eOperational Due Diligence as Distinguished from Operational Management of Portfolio Companies 9\u003c\/p\u003e \u003cp\u003eTiming of Operational Due Diligence in the Investing Process 10\u003c\/p\u003e \u003cp\u003eOperational Due Diligence Process 13\u003c\/p\u003e \u003cp\u003eHistorical Perspectives of Private Equity Operational Risk 16\u003c\/p\u003e \u003cp\u003eItems Typically Covered during the Operational Due Diligence Process 23\u003c\/p\u003e \u003cp\u003eCore versus Expanded Operational Due Diligence Reviews 25\u003c\/p\u003e \u003cp\u003eShared Commonalities between Private Equity and Real Estate Operations Risk 30\u003c\/p\u003e \u003cp\u003eDifferences in Operational Risk Factors between Private Equity and Real Estate 32\u003c\/p\u003e \u003cp\u003eCountry- and Industry-Specific Risk Considerations 33\u003c\/p\u003e \u003cp\u003eInvestment and Operational Due Diligence: Nexus or Blurred Lines? 39\u003c\/p\u003e \u003cp\u003eDifferences and Similarities with Hedge Fund Operational Due Diligence 40\u003c\/p\u003e \u003cp\u003eNotes 49\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 Importance of Operational Due Diligence for Private Equity Funds 51\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eUnderstanding the Goals of the Operational Due Diligence Process 52\u003c\/p\u003e \u003cp\u003eCommon Arguments against Operational Reviews of Private Equity Funds 55\u003c\/p\u003e \u003cp\u003eCommon Arguments in Favor of Performing Operational Reviews of Private Equity Funds 75\u003c\/p\u003e \u003cp\u003eConclusion 82\u003c\/p\u003e \u003cp\u003eNotes 82\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 Beginning the Operational Due Diligence Review: Core Issues 85\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eGoal Self-Assessment 85\u003c\/p\u003e \u003cp\u003eDesigning an Operational Due Diligence Program for Private Equity 87\u003c\/p\u003e \u003cp\u003eWhen Does the Operational Due Diligence Process Begin? 101\u003c\/p\u003e \u003cp\u003eSignaling Effects of Operational Flags 104\u003c\/p\u003e \u003cp\u003eRequesting and Collecting Documentation 104\u003c\/p\u003e \u003cp\u003eNondisclosure and Confidentiality Agreements 106\u003c\/p\u003e \u003cp\u003eDocument Collection: What Documents Should Investors Request? 113\u003c\/p\u003e \u003cp\u003eDocument Collection Negotiation Techniques: Avoiding a Pass-the-Buck Environment 117\u003c\/p\u003e \u003cp\u003eDocument Collection: Hard Copy or Electronic? 119\u003c\/p\u003e \u003cp\u003eFund Manager On-Site Due Diligence Considerations 125\u003c\/p\u003e \u003cp\u003eKey Risk Consideration Areas to Cover 128\u003c\/p\u003e \u003cp\u003eConclusion 133\u003c\/p\u003e \u003cp\u003eNotes 133\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 Additional Operational Due Diligence Considerations: An Expanded Analysis 135\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCore Issues versus Expanded Analysis 135\u003c\/p\u003e \u003cp\u003eCompensation Structures 138\u003c\/p\u003e \u003cp\u003eIntroduction to Private Equity Fund Fees 139\u003c\/p\u003e \u003cp\u003eManager Investment in Funds 140\u003c\/p\u003e \u003cp\u003eEvaluating Service Providers 141\u003c\/p\u003e \u003cp\u003eAdditional On-Site Visit Considerations: Negative Operational Due Diligence 148\u003c\/p\u003e \u003cp\u003eAdditional On-Site Visit Considerations: Interview Techniques and Question Design 150\u003c\/p\u003e \u003cp\u003eAsset Raising and the Use of Placement Agents and Third-Party Marketers 159\u003c\/p\u003e \u003cp\u003eCash Management and Controls 162\u003c\/p\u003e \u003cp\u003eBusiness Continuity and Disaster Recovery 165\u003c\/p\u003e \u003cp\u003eUnderstanding the Trade Life Cycle Process 168\u003c\/p\u003e \u003cp\u003eLegal, Compliance, and Regulatory Risks 171\u003c\/p\u003e \u003cp\u003eInsurance 173\u003c\/p\u003e \u003cp\u003eTechnology and Systems 174\u003c\/p\u003e \u003cp\u003eTax Practices 175\u003c\/p\u003e \u003cp\u003eDiagnosing and Mitigating Reputational Risk 177\u003c\/p\u003e \u003cp\u003eConclusion 179\u003c\/p\u003e \u003cp\u003eNotes 179\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 Valuation Techniques, Methodologies, and Standards 181\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLimited Partner Distinction between Fund Level and Portfolio Company Valuation Approaches 181\u003c\/p\u003e \u003cp\u003eValuation Considerations for Newly Formed Funds 182\u003c\/p\u003e \u003cp\u003eIntroduction to Valuation 182\u003c\/p\u003e \u003cp\u003eGIPS Statement on Private Equity 183\u003c\/p\u003e \u003cp\u003eIPEV Guidelines 185\u003c\/p\u003e \u003cp\u003eFas 157 189\u003c\/p\u003e \u003cp\u003eUse of Third-Party Valuation Consultants 191\u003c\/p\u003e \u003cp\u003eValuation Output Process Documentation 194\u003c\/p\u003e \u003cp\u003eValuation Committee Review Scope 196\u003c\/p\u003e \u003cp\u003eAdditional Limited Partner Valuation Considerations 197\u003c\/p\u003e \u003cp\u003eConclusion 197\u003c\/p\u003e \u003cp\u003eNotes 198\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 Legal Due Diligence 199\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eOperational Due Diligence Specialists versus Generalists 199\u003c\/p\u003e \u003cp\u003eCommon Private Equity Fund Structures 201\u003c\/p\u003e \u003cp\u003eUnderstanding the Private Placement Memorandum 201\u003c\/p\u003e \u003cp\u003eCommon Document Risk Assignment Terms 206\u003c\/p\u003e \u003cp\u003eExculpation and Indemnity 206\u003c\/p\u003e \u003cp\u003eTrends in Indemnification and Exculpation Clauses 217\u003c\/p\u003e \u003cp\u003eOther Legal Documents Considerations 227\u003c\/p\u003e \u003cp\u003eConclusion 228\u003c\/p\u003e \u003cp\u003eNotes 228\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 Financial Statement Due Diligence 233\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eAudit Standards 233\u003c\/p\u003e \u003cp\u003eAccounting Standards 235\u003c\/p\u003e \u003cp\u003eOther Financial Statement Formats 237\u003c\/p\u003e \u003cp\u003eConsiderations That Are Unique to Private Equity and Real Estate Financial Statements 241\u003c\/p\u003e \u003cp\u003eUnderstanding Financial Statement Sections 244\u003c\/p\u003e \u003cp\u003eOther Financial Statement Sections 245\u003c\/p\u003e \u003cp\u003eUnderstanding FAS 157 251\u003c\/p\u003e \u003cp\u003eConclusion 254\u003c\/p\u003e \u003cp\u003eNotes 254\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8 Distinguishing the Assets Class: Real Estate–Specific Concerns 257\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eReal Estate Trade Flow Process 257\u003c\/p\u003e \u003cp\u003eSample Real Estate Process 258\u003c\/p\u003e \u003cp\u003eReal Estate Valuation 262\u003c\/p\u003e \u003cp\u003eMonitoring Conflicts of Interest 266\u003c\/p\u003e \u003cp\u003eFraud Considerations: Mortgage Fraud and Straw-Man Borrowers 269\u003c\/p\u003e \u003cp\u003eUnderstanding Real Estate Fund Fees 270\u003c\/p\u003e \u003cp\u003eProperty Holdings Legal Considerations 271\u003c\/p\u003e \u003cp\u003eConclusion 272\u003c\/p\u003e \u003cp\u003eNote 273\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 Putting It All Together: Asset Allocation and Ongoing Monitoring 275\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIncorporating the Results of Operational Due Diligence into Asset Allocation 276\u003c\/p\u003e \u003cp\u003eEvolution of Minimum Operational Risk Regime (MORR) 283\u003c\/p\u003e \u003cp\u003eOperational Risk Correlations to Portfolio Transaction Frequency 285\u003c\/p\u003e \u003cp\u003eOperational Lift-to-Drag Ratio 286\u003c\/p\u003e \u003cp\u003eNegotiating Private Equity Side Letters 290\u003c\/p\u003e \u003cp\u003eOngoing Monitoring: Operational Due Diligence Monitoring for Private Equity Funds 292\u003c\/p\u003e \u003cp\u003eConclusion 296\u003c\/p\u003e \u003cp\u003eAppendix: Mathematical Conepts 297\u003c\/p\u003e \u003cp\u003eThe Derivative 297\u003c\/p\u003e \u003cp\u003eThe Chain Rule 298\u003c\/p\u003e \u003cp\u003eThe Second Partial Derivative Test 299\u003c\/p\u003e \u003cp\u003eNotes 300\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 Boards, Committees, and Activism 301\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003ePrivate Equity Fund Advisory Boards 301\u003c\/p\u003e \u003cp\u003eDifferent Types of Advisory Boards: Limited Partners versus Pure Advisors 302\u003c\/p\u003e \u003cp\u003eOngoing Operational Due Diligence Monitoring Advisory Benefits 303\u003c\/p\u003e \u003cp\u003eBalancing the Role of Inner Circle versus Broadly Representative Advisory Boards 305\u003c\/p\u003e \u003cp\u003eAdvisory Board Criticisms: Crowding Out, Power Aggregation, and Redundant Board Layers 306\u003c\/p\u003e \u003cp\u003eInformation Flow Considerations from Underlying Portfolio General Partner to Limited Partners 307\u003c\/p\u003e \u003cp\u003eLimited Partner Due Diligence Considerations for a Private Equity Fund of Funds 308\u003c\/p\u003e \u003cp\u003eAdditional Private Equity Advisory Board Considerations 311\u003c\/p\u003e \u003cp\u003eConclusion 313\u003c\/p\u003e \u003cp\u003eNotes 313\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11 Case Studies and Scenarios 315\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCase Studies 315\u003c\/p\u003e \u003cp\u003eHypothetical Scenarios 326\u003c\/p\u003e \u003cp\u003eNotes 335\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12 Trends and Future Developments 341\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eUse of Third-Party Administrators 341\u003c\/p\u003e \u003cp\u003eIncreased Focus on Material Nonpublic Information in the United States 345\u003c\/p\u003e \u003cp\u003eIncreased Reliance on Audit-Type Certifications 348\u003c\/p\u003e \u003cp\u003eIncreased Use of Operational Due Diligence Consultants 350\u003c\/p\u003e \u003cp\u003ePooling Operational Due Diligence Resources among Multiple LPs 352\u003c\/p\u003e \u003cp\u003eOperational Benchmarking 353\u003c\/p\u003e \u003cp\u003eILPA Guidelines 354\u003c\/p\u003e \u003cp\u003eFrom Self-Regulation to Mandatory Registration 355\u003c\/p\u003e \u003cp\u003eImpact of Dodd-Frank on Operational Due Diligence 356\u003c\/p\u003e \u003cp\u003eConclusion 357\u003c\/p\u003e \u003cp\u003eNotes 358\u003c\/p\u003e \u003cp\u003eAbout the Author 359\u003c\/p\u003e \u003cp\u003eAbout the Website 361\u003c\/p\u003e \u003cp\u003eIndex 363\u003c\/p\u003e \u003cp\u003e\u003cb\u003eJASON A. SCHARFMAN \u003c\/b\u003eis a Managing Partner at Corgentum Consulting. He performs operational due diligence reviews of hedge funds, private equity, and real estate funds on behalf of institutional investors, pensions, high net worth individuals, and ERISA plans. Prior to forming Corgentum, he was the Director of Operational Risk at Graystone Research (Morgan Stanley). As Director, he was responsible for managing global operational risk assessment for all U.S., Asian, and European funds. His articles have appeared in \u003ci\u003ePension \u0026amp; Investments\u003c\/i\u003e and FINAlternatives.com\u003ci\u003e. \u003c\/i\u003eHe also teaches a course at New York University, has consulted with the U.S. House Judiciary Committee on the subject of hedge fund and private equity regulation, and provided training to financial regulators on the subject of hedge fund and private equity due diligence.\u003c\/p\u003e  \u003cp\u003eThough 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, \u003ci\u003ePrivate Equity Operational Due Diligence\u003c\/i\u003e arms you with the tools to develop detailed, agile, comprehensive, and \u003ci\u003eongoing \u003c\/i\u003eoperational due diligence reviews.\u003c\/p\u003e\u003cp\u003eAddressing 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, \u003ci\u003ePrivate Equity Operational Due Diligence\u003c\/i\u003e 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.\u003c\/p\u003e\u003cp\u003eIn this step-by-step guide, you’ll discover:\u003c\/p\u003e\u003cul\u003e\n\u003cli\u003eOperational risk compared to operational due diligence\u003c\/li\u003e\n\u003cli\u003eUnderstanding the goals of the operational due diligence process\u003c\/li\u003e\n\u003cli\u003eDesigning an operational due diligence program for private equity\u003c\/li\u003e\n\u003cli\u003eKey risk consideration areas\u003c\/li\u003e\n\u003cli\u003eCash management and controls\u003c\/li\u003e\n\u003cli\u003eBusiness continuity and disaster recovery\u003c\/li\u003e\n\u003cli\u003eValuation committee review scope\u003c\/li\u003e\n\u003cli\u003eOperational due diligence specialists versus generalists\u003c\/li\u003e\n\u003cli\u003eTrends in indemnification and exculpation clauses\u003c\/li\u003e\n\u003cli\u003eFraud considerations: mortgage fraud and straw man borrowers\u003c\/li\u003e\n\u003cli\u003eEvolution of Minimum Operational Risk Regime (MORR)\u003c\/li\u003e\n\u003cli\u003eOngoing fund monitoring techniques\u003c\/li\u003e\n\u003cli\u003ePrivate equity fund advisory boards\u003c\/li\u003e\n\u003cli\u003eDifferent types of advisory boards: Limited Partners versus Pure Advisors\u003c\/li\u003e\n\u003cli\u003eCase studies and scenarios\u003c\/li\u003e\n\u003cli\u003eTrends and future developments\u003c\/li\u003e\n\u003cli\u003eUse of third-party administrators\u003c\/li\u003e\n\u003cli\u003eImpact of Dodd-Frank on operational due diligence\u003c\/li\u003e\n\u003c\/ul\u003e\u003cp\u003eA 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. \u003c\/p\u003e\u003cp\u003eIt’s time to give operational due diligence its due respect with \u003ci\u003ePrivate Equity Operational Due Diligence.\u003c\/i\u003e\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47989856436453,"sku":"NP9781118113905","price":100.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781118113905.jpg?v=1761785692","url":"https:\/\/k12savings.com\/products\/private-equity-operational-due-diligence-website-isbn-9781118113905","provider":"K12savings","version":"1.0","type":"link"}