Sifma Agreement regarding Oral Due Diligence

The Securities Industry and Financial Markets Association (SIFMA) recently released a new agreement regarding oral due diligence. The agreement is aimed at helping financial firms streamline their due diligence process while also improving the quality of their reviews.

The SIFMA agreement is designed to promote consistency and clarity in the due diligence process. It provides a framework for firms to follow when conducting oral due diligence, which is a key component of a thorough review of potential investment opportunities.

One of the key elements of the agreement is the requirement for firms to document their due diligence process. This includes taking detailed notes during interviews with potential investment partners and keeping records of all relevant communications.

The agreement also emphasizes the importance of making clear and concise notes that accurately capture the substance of the conversation. This is essential for maintaining a comprehensive record of the due diligence process and ensuring that the firm is able to defend its decisions if necessary.

Another important aspect of the agreement is the requirement for firms to evaluate the qualifications and expertise of the parties involved in the investment opportunity. This includes assessing their track record, experience, and credentials to ensure that they are qualified to participate in the investment.

The SIFMA agreement also stresses the importance of seeking out third-party references for potential investment partners. This helps to verify their qualifications and provides valuable insights into their track record and reputation.

Overall, the new SIFMA agreement regarding oral due diligence provides a valuable framework for financial firms to follow when conducting their due diligence process. By ensuring that all relevant information is gathered and documented, firms can make more informed investment decisions and reduce their risk exposure.