What is the difference between deal level and fund level diligence?
Updated
Deal level diligence tests one transaction: its price, terms, structure and fit with the mandate, including co-investments and direct deals. Fund level diligence tests the commingled fund: its strategy, terms, facilities and the holdings inside it read on look-through. Reuben AI keeps both as linked records across the six levels of private markets.
The deal and the fund are two of the six levels of private markets, alongside the asset, the vehicle, the manager and the investor's total portfolio. They are often confused because a fund is made of deals. The diligence question is different: at deal level the investor chooses the asset and the terms; at fund level the investor chooses a manager to make those choices on shared terms.
The two meet when an investor co-invests alongside a fund it has committed to. The deal is then diligenced in its own right and as a holding inside the fund, and a finding on one should be visible on the other.
How Reuben AI compares
How deal level and fund level diligence differ.
| Attribute | Reuben AI | Fund level |
|---|---|---|
| Subject | One transaction, including co-investments and direct deals | The commingled fund |
| Core question | Is this asset, on these terms, worth doing | Will this pool, on these terms, deliver the strategy |
| Primary evidence | Term sheet, transaction documents, asset diligence | Fund documents, reporting, holdings on look-through |
| Who decides the assets | The investor | The manager |
Frequently asked questions
Is deal level diligence the same as asset diligence?
No. Asset diligence tests the business, property or loan. Deal level diligence tests the transaction around it: price, terms, rights and structure.
Does fund level diligence include the deals inside the fund?
Yes, through look-through: the existing holdings are read as records rather than accepted at the summary the manager provides.
Which comes first in a co-investment?
Both run together. The deal is assessed directly, and its place in the lead manager's fund is read alongside it.
Where does manager diligence fit?
Above both. The manager's process and controls shape every deal and fund it runs, so the assessment is maintained across them.
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