Due Diligence · The Orion approach

Diligence, layered.

Every fund in the Orion marketplace passes through three layers of due diligence: the GP's own materials, Orion's curation framework, and third-party research from the leading institutional consultants.

Framework · 10 Points

The Orion 10-point DD framework

Each fund in the marketplace is scored across these ten dimensions by Orion's Investment Committee. Funds must clear a 75/100 minimum to enter the curated lineup, and re-score annually to remain.

01

Strategy clarity

Is the edge clear? Can we explain it on one page?

02

Team depth

Tenure, succession, key-person risk, alignment.

03

Track record

Vintage diversity, peer-relative, fee-adjusted.

04

Portfolio diversification

Sector / geo / vintage / position size limits.

05

Terms

Fees, hurdle, catchup, lockup, transparency.

06

Alignment

GP commitment, employee co-invest, clawback.

07

Operations

Service providers, audit, valuation policy, cash management.

08

Risk lens

Liquidity, valuation, leverage, concentration.

09

References

LP references (positive + negative), peer references.

10

Advisor fit

Suitable for Orion's typical client profiles?

How to read a track record

Track records, decoded.

The most common mistake in PE/credit DD is comparing apples to oranges. Here's the Orion-approved framework for reading any fund track record correctly.

1

Net of all fees, ALWAYS

Gross IRR / TVPI doesn't reach the LP. Use only net-of-fees figures.

2

Vintage-aware

Compare like vintages only. A 2009 fund and a 2021 fund are different animals.

3

Peer-benchmarked

Top-quartile within the relevant peer set, not vs. all PE.

4

DPI > IRR

Cash returned (DPI) is real money. IRR can be theoretical until DPI catches up.

5

Leverage-adjusted

A 25% IRR on 80% leverage isn't the same as 25% on 30% leverage. Read the fine print.

6

Persistence

Top-quartile in one vintage = noise. Top-quartile in 3 consecutive vintages = signal.

The 4 risk lenses

Risk, named explicitly.

"Risk" in alts is four very different things. The Orion DD process scores each fund against all four — and the score appears on the fund's tearsheet.

Liquidity Risk

Can the LP get out when they want? Gates, lockups, queues, suspension clauses. The most under-priced risk in evergreen vehicles. Stress-test every redemption assumption.

Valuation Risk

Are NAV marks reliable? Look at: third-party valuation policy, frequency of audited marks, reliance on smoothing models. PE marks are quarterly and lag public markets significantly.

Leverage Risk

Fund-level leverage, asset-level leverage, and recourse provisions. Modest fund leverage (1.2x) on already-levered assets can be very different from 1.2x leverage on equity.

Concentration Risk

Position size limits, sector caps, geographic exposure, top-5 concentration. Useful test: what does the fund look like if the top 3 positions go to zero?

Third-party DD partners

External validation, integrated.

Orion partners with the leading institutional consultants. Their research is integrated directly into the fund pages — click "Third-party DD" on any tearsheet to access.

Mercer
A / B / C ratings, manager research
Wilshire
Approved-list framework
Cliffwater
Recommend / Watch / Decline
Aksia
Operational DD specialty
Advisor playbook

How to walk a client through DD.

Five-step conversation script for the suitability + DD discussion. Compliance-approved. Use as-is or adapt.

  1. Why is alts on the table? Anchor on the gap their current portfolio has — concentration, yield, inflation hedge, growth.
  2. How much, and how long? Pin down the sleeve size and the time horizon. This eliminates 80% of unsuitable fund suggestions.
  3. How much liquidity do you need? Liquidity tolerance determines vehicle type more than asset class. Use the Liquidity Stress Test calculator on screen.
  4. What can go wrong? Walk through the 4 risk lenses above. Use plain language. Document the conversation.
  5. What does Orion's DD say? Walk through the fund's 10-point score + third-party ratings + risk lens scores from the tearsheet. The client should see the work.