Here are some key quotes from my latest podcast with James Newman, Co-Head & Co-Founder of perfORM Due Diligence Services, discussing the fundamentals and latest trends in operational due diligence:

“We are the only ODD group of its kind in the UK, and are distinguished by our broad experience in private credit, private markets, real estate, infrastructure. You know, we cover a great range of asset classes.”

“An audit background has a lot of overlaps and crossovers with operational due diligence.  But I think there’s actually more sort of softer sides as well.  It’s like being inquisitive. It’s a willingness to ask what I call the second question.”

“Speaking to peers in the industry over the years, being able to share experiences, that I think has broadened the operational due diligence discipline across [a broad set of] asset classes.”

“For me, ODD means performing and understanding operational risks at a business and identifying the mitigating factors controls that are there to reduce that operational risk.”

“Any good operational due diligence program will look to verify the operational policies, processes and controls in place, and then provide an opinion, and in some cases, a rating in order to give clients and participants in industry – whoever’s using the report – confidence and what we call operational conviction in an investment.”

“What you’re seeing these days is [clients] don’t want just to be told or just given a cookie cutter type of operational due diligence report. There’s something in particular that they want you to help them with.”

“I think the principles of ODD are the same globally.  But I think certain standards and policies, they vary across the globe.”

“We’re moving into now what I call the pandemic unwind. It’s partial. We’re not expecting the pandemic’s end, but we are nonetheless seeing in different regions at different speeds a return to the office. And people are thinking about ‘will I be able to travel, will I not be able to travel.’”

“But always remember that with any operational due diligence program, 70 to 80% of that has always been desk-based.  It’s always been about document reviews, policies, getting evidence, verifying information, going out to service providers, to the administrator and to the custodian; all of those sorts of things.”

“I know your sponsor, DiligenceVault, is a very well-respected technology provider and they’re doing a fantastic job in that space. We do use technology, we feel that the collection, the organizing and production of due diligence information should not be done manually.”

“You should never be scared of technology. It’s an enabler. It’ll allow you as an analyst, in my humble opinion, to do more analyzing.  That’s what the client wants or it’s what your employer wants you to do.”

“One bit of advice [for managers] would be to help the operational due diligence analyst do their review.  You know, you can help them get the information that they need and be transparent. So provide that all up front, even lead the agenda.”

“You know, an operational due diligence review in a good back office and in a good middle office wont win you are mandate from a manager’s perspective, but it can lose you one. And that’s the important thing.”