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This article (the “Article”) is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any investment or any securities. This Article does not constitute investment advice and is not intended to be relied upon as the basis for an investment decision, and is not, and should not be assumed to be, complete. Readers should make their own investigations and evaluations of the information contained herein. The information contained herein does not take into account the particular investment objectives or financial circumstances of any specific person or entity who may receive it. Each reader should consult its own attorney, business adviser and tax adviser as to legal, business, tax and related matters concerning the information contained herein.  Except where otherwise indicated herein, the information provided herein is based on matters as they exist as of the date of preparation and not as of any future date and will not be updated or otherwise revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after the date of preparation. Certain information contained in this Article constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,”  “target,” “project,” “estimate,” “intend,” “continue” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking statements. Readers should not rely on these forward-looking statements.  Certain information reflects subjective determinations which may prove to be incorrect. There can be no assurance that the estimates or projections will be accurate or that historical trends will continue. In considering the prior performance information contained herein, readers should bear in mind past performance is not necessarily indicative of future results. All rights reserved. The material may not be reproduced or distributed, in whole or in part, without the prior written permission of PrimeAlpha LLC.

How to Conduct Reference Checks


"Don't forget the simple but important things that need to be done in the investment process."

With over 25 years of experience working with alternative funds, we asked Patrick Campbell of Perth Advisors what the most common miss is by investors during due diligence. “Reference checks”


Reference checks are an important part of the due diligence process. In addition to giving third-party validation to the due diligence documents the GP has given you, they can provide additional color on many qualitative aspects of how the principals conduct themselves inside and outside their firm.


For LPs / Investors:


Every investment is different, so your reference check will vary from manager to manager, but here are some guidelines that you may find useful.

How to Conduct Reference Checks

  • Verify Historical Accuracy: Ensure the reference’s account matches the historical data you’ve received about the firm or individual.

  • Prepare Questions: Develop a mix of open-ended (e.g., "How do you know Janet Smith?") and specific questions (e.g., "Who actually led the XYZ deal when you worked together?") tailored to the relationship with the principal (e.g., superior, peer, junior, vendor).

  • Initiate Contact Thoughtfully: Typically, a brief email requesting a 20-minute conversation is sufficient.

  • Include Essential Queries: Don’t overlook fundamental questions like, "In your experience, does this person act in an honest and trustworthy manner?" Such inquiries are critical as they relate directly to the integrity with which your capital will be handled.

  • Conduct the Reference Check: Surprisingly, many investors skip this step. The case of former Madoff investors underscores the importance of this due diligence component.

How to Conduct Reference Checks

For GPs / Fund Managers:

  • Provide Diverse References: Offer LPs a list of about six references that can affirm your background and track record, including at least one investor who can vouch for your capabilities.

  • Choose References Wisely: Avoid listing other alternative fund managers as references. Despite not being direct business competitors, they are rivals for capital, which can lead to conflicts during the reference process.

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