Guide
The six levels of private markets diligence
Every private markets decision sits on six levels at once. Most workflows look at one at a time. The risk usually lives in the links between them.
By Katriona Lee, Reuben AI. Last reviewed .
The short answer
Private markets diligence happens at six levels: the asset or portfolio company, the deal, the vehicle, the fund, the manager and the investor's total portfolio. Reuben AI is built as one linked record across all six levels of private markets, so a finding at the asset carries through the deal, vehicle, fund and manager to the investor's total portfolio.
An investor backing a continuation fund is underwriting a company, a transaction, a vehicle, the fund it came from, the manager running both and their own exposure across everything else they hold. Those are six different questions with six different evidence bases. Answer them in six different places and the most important finding, the one that changes the answer at another level, tends to fall through the gap.
Asset or portfolio company
The business, property or loan itself.
What to check
Business quality, cash flows, collateral, management, legal and operational risk.
Typical evidence gaps
Unaudited figures, missing contracts, unverified management claims.
Receives from below
Source documents and evidence directly.
Passes up
Findings, risks and open questions on the underlying business, property or loan. Next: deal.
The six levels, defined
- 01 Asset or portfolio company. The business, property or loan itself.
- 02 Deal. The transaction, including co-investments and direct deals.
- 03 Vehicle. SPVs, feeders and continuation funds.
- 04 Fund. The commingled fund.
- 05 Manager. The GP, its team and track record across funds.
- 06 Portfolio. An investor's total holdings across every manager, fund and direct deal.
What to check at each level
| Level | What to check | Sources | Output |
|---|---|---|---|
| Asset or portfolio company | Business quality, cash flows, collateral, management, legal and operational risk. | Data room documents, management information, site visits, third-party reports. | Asset findings and evidence gaps |
| Deal | Price, terms, structure, rights, conditions precedent and how the deal fits the mandate. | Term sheets, SPAs, financing documents, side letters, the investment thesis. | Deal memo and committee decision |
| Vehicle | Governance, fees, waterfall, conflicts, liquidity and the rights the vehicle gives investors. | Constitutional documents, LPAs, subscription documents, valuation and transfer terms. | Vehicle terms review |
| Fund | Strategy, terms, pacing, concentration, fund-level facilities and holdings on look-through. | Fund documents, reporting, holdings data, financial statements. | Fund diligence and exposure view |
| Manager | Track record attribution, team stability, decision rights, process and operational controls. | Track record detail, policies, service provider confirmations, references. | Manager assessment |
| Portfolio | Total exposure, overlap, concentration and thesis drift across every holding. | The linked records below it: assets, deals, vehicles, funds and managers. | Portfolio view, monitoring and thesis review |
How one finding travels the chain
An illustrative example, not a customer result. A diligence team finds that a portfolio company's largest customer contract has a change of control clause.
- 01Asset. The clause is recorded as a finding, linked to the contract page it came from.
- 02Deal. The deal memo flags it as a condition: consent before completion, or a price adjustment.
- 03Vehicle. The SPV's waterfall and transfer terms are read against a possible loss of that revenue.
- 04Fund. The fund's exposure view shows how much of its value depends on that one contract.
- 05Manager. The manager assessment asks whether the GP found it, and how its process handles it next time.
- 06Portfolio. The investor sees the same customer risk wherever else it appears across their holdings.
Why the links matter more than the levels
Each level on its own is well understood. The failures happen between them: a vehicle term that quietly changes the deal economics, a fund facility that changes how reported performance should be read, a manager's key-person change that nobody connected to the deal still in diligence. Keeping every finding linked to its source and to the record it belongs to is what lets a committee see the whole picture, and lets the team revisit it after the decision.
Go deeper by level: company and asset, deal versus fund, vehicle, fund, manager and portfolio look-through. For co-investments and direct deals, read how they fit into portfolio diligence.
The thought pieces take one level at a time: The Anatomy of a Deal, When to use leverage as... leverage and To Fund or Not to Fund.
Questions and answers
What are the six levels of private markets diligence?
Asset or portfolio company, deal, vehicle, fund, manager and portfolio. Each has its own subject, evidence and risks, and findings at one level change the reading at the others.
Why treat the deal as its own level?
The same asset can be bought on very different terms. Price, rights, structure and conditions belong to the transaction, including co-investments and direct deals, not to the asset itself.
What is the difference between a vehicle and a fund?
A fund is the commingled pool of capital. A vehicle is a structure built around it or alongside it, such as an SPV, a feeder or a continuation fund, with its own terms, fees and rights.
Does every investment need diligence at all six levels?
Not to the same depth. A direct deal skips the fund level, and a fund commitment relies on look-through rather than full asset diligence. What matters is knowing which levels were covered and which were not.
How do findings move between levels?
Each finding stays linked to its source and to the record it belongs to, so it carries up into the deal memo, the vehicle and fund view, the manager assessment and the investor's portfolio without being retyped.
Where does manager diligence fit?
Manager diligence covers the GP, its team and track record across funds. It sits above individual funds because the same firm's process and controls affect every vehicle and deal it runs.
Does Reuben AI make the investment decision?
No. Reuben AI keeps the evidence, findings and rationale linked across the six levels. Judgement stays human, and the committee makes the decision.
Reuben AI is built as one linked record across all six levels of private markets. See it on your own deals, or explore what it could add for your platform's clients.
Read next: The six levels of private markets diligence or browse the Resource Hub.