The six levels, one at a time. No. 1: Deal
The Anatomy of a Deal
Everyone diligences the asset. Fewer diligence the deal. They are not the same thing.
By Katriona Lee, Reuben AI. Updated .
The short answer
A private markets deal has five parts: the asset, the terms, the structure, the people and the decision. The data room covers the first. The other four decide whether the same asset is a good investment or a bad one.
Hand two investors the same company and they will walk away with different deals. One pays more but gets protection. One goes in through an SPV, the other directly. One has a sponsor they trust, the other is relying on a co-investor they have met twice. Same asset. Different outcome.
That is why the deal deserves its own level. Here is what it is made of. Tap each part.
What you are actually buying.
The business, property or loan. Its cash flows, its customers, its contracts. Everything else in the deal is a wrapper around this.
The data room is the asset's story, told by the seller
It is necessary and it is incomplete. It tells you about the business. It rarely tells you what the terms really cost you, how the structure behaves under stress, what the other people around the table want, or, months later, why your committee said yes.
The decision is the part that disappears
Price and terms survive in the legal documents. The reasoning does not. Which risks were accepted, which conditions were set, which evidence gap the committee decided to live with. When the deal goes off plan, that is the first thing anyone asks for, and the hardest thing to find.
Where the deal sits
The deal sits between the asset and everything built on top of it: the vehicle it is held in, the fund that owns it, the manager running it and the investor's total portfolio. A finding in the deal travels in both directions.
Deal
The transaction, including co-investments and direct deals.
What to check
Price, terms, structure, rights, conditions precedent and how the deal fits the mandate.
Typical evidence gaps
Unresolved terms, missing consents, assumptions not yet tested against evidence.
Receives from below
Findings from asset or portfolio company level, with sources attached.
Passes up
The transaction case, with each asset finding carried into the deal memo. Next: vehicle.
Next in the series: When to use leverage as... leverage.
Questions and answers
What is a deal in private markets?
A deal is the transaction itself: the terms, structure and decision around buying an asset, including co-investments and direct deals. It is a separate level from the asset being bought.
What are the parts of a deal?
Five parts: the asset, the terms, the structure, the people and the decision. Diligence that covers only the asset misses most of what decides the outcome.
Why is a deal more than its data room?
A data room describes the asset. The terms, the structure, the incentives of the people involved and the reasoning behind the decision live mostly outside it.
What is deal-level diligence?
Deal-level diligence tests the transaction: price, rights, conditions and structure, and how the deal fits the mandate, alongside diligence on the asset itself.
How does Reuben AI handle the deal level?
Reuben AI keeps the deal as its own record, linked to the asset findings beneath it and the vehicle, fund and portfolio above it, with the committee rationale attached.
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.