From Diligence to Closing: The 6 Execution Gaps That Slow Alternative Asset Allocations
Alternative asset allocations rarely fall apart for strategic reasons.
LPs who committed to entering a fund — and who subsequently did not close on schedule — did not change their minds about the strategy or the management team. Delays happen in the spaces between stages: between the end of diligence and the start of document negotiation, between the side letter and the LPA signature, between signing and capital transfer. They are execution gaps — and most of them are predictable.
Gap 1: Incomplete information at the start of diligence
Many diligence processes begin without the LP having received the complete document set. The LP extends their process because they cannot close it with the available information. What should take 4 weeks takes 10.
Gap 2: No clear document roadmap
In funds with complex structures — feeders, parallel vehicles, alternative access vehicles — the proliferation of documents without a clear roadmap creates repeated queries, confusion about which document governs which aspect, and reviews that are duplicated unnecessarily.
Gap 3: Side letter negotiation without documented precedent
When the Latin American LP presents their side letter requests, the GP frequently does not have visibility into which similar provisions they have already granted in the past. Responses are slow because they require internal review, and MFN risks have not been mapped in advance.
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Gap 4: LP not coordinating with their custodian or administrator in parallel
The LP may have internally approved the commitment, but formalization requires coordination with their custodian or fund administrator. If this coordination does not begin in parallel with the document negotiation, it becomes a second sequential stage that can add 2-4 weeks to the closing.
Gap 5: Onboarding documentation not anticipated
Funds domiciled in Delaware, Cayman, or Luxembourg have KYC/AML requirements that activate during LP onboarding. Most Latin American LPs do not have this documentation organized in advance, which can delay the closing by 2-6 weeks depending on the complexity of the LP's ownership structure.
Gap 6: Misalignment between the GP's IR team and their counsel
When coordination between IR and counsel is smooth, processes accelerate. When there is misalignment — LP questions that arrive to IR days late, answers from legal that take additional days — the process fragments and LPs interpret the slowness as lack of prioritization.
The underlying pattern
None of these six gaps requires a complex solution. All of them require the same thing: anticipation and coordination before the process is under closing pressure.