-Mindaugas Suklevicius – Founder and Fund Manager at HF Quarters
Operational due diligence is no longer a simple compliance exercise. For many investors, it is one of the clearest indicators of whether a fund is equipped to manage operational challenges without shifting risk or disruption onto its limited partners.
Today’s private markets are characterised by longer investment horizons, greater capital discipline and a more complex execution environment. Combined with geopolitical uncertainty and changing monetary policy, investors are placing greater emphasis on resilience. Governance is no longer viewed as a theoretical framework it is judged by how effectively a fund operates when market conditions become more demanding.
During due diligence, investors are rarely satisfied with a valuation policy, an organisational chart or a collection of documented procedures. They want to understand whether the fund’s operating model can continue to function effectively under pressure. This means assessing whether governance, oversight, decision-making, service providers, and operational controls remain reliable when conditions are less predictable.
Regulatory developments reinforce this expectation. The implementation of AIFMD II introduces stronger governance and operational oversight requirements for alternative investment funds, while DORA raises the standard for digital operational resilience and cyber risk management. Together, these frameworks signal a broader regulatory shift: governance is assessed by demonstrable operational capability rather than the existence of policies alone.
For credible fund managers, these principles should already be embedded in day-to-day operations rather than implemented solely to satisfy regulatory requirements. Investors increasingly look for evidence that key processes have been tested, risks have been considered, and contingency plans are practical rather than theoretical. While no organisation can anticipate every possible event, demonstrating a structured approach to resilience provides confidence that the fund is prepared to respond effectively when challenges arise.
Ultimately, operational due diligence is about more than confirming compliance. It is an assessment of whether a fund has the governance, infrastructure, and operational discipline to deliver consistent outcomes in an increasingly uncertain market.