Due Diligence in Private Equity Real Estate Investments and the Role of Advisors
Recently, Yuliya Oryol teamed with Nossaman client Jeremy Wolfson, Chief Investment Officer of the Los Angeles Water and Power Employees' Retirement Plan, to co-author a white paper. It became the basis of an article in the May issue of Private Equity Real Estate magazine. In the article, Ms. Oryol and Mr. Wolfson outline the role of investment advisors and the importance of due diligence not only conducted in advance but also during the critical period between the time an investment recommendation is made and the capital is committed.
Ms. Oryol is quoted in the article saying, "These deals – and the markets in which the managers are investing – are constantly changing and pension consultants need to be conducting that due diligence until the investment is actually made. Appropriate and sufficient due diligence is needed at every stage of the investment process."
Mr. Wolfson added, "Due diligence conducted by consultants only prior to the investment recommendation stage is insufficient without extensive follow-up thereafter, no matter how appropriate the investment recommendation may have been initially."
Ms. Oryol concluded, "If consultants do not conduct extensive due diligence, as part of the financial advisory services offered to their clients, then they fail to provide the type of services needed to help their clients obtain the best possible returns and expose their clients to significant risk."