How to answer value creation questions in an ILPA due diligence questionnaire

The short answer: show the system, then the proof

LPs read the value creation answers in a DDQ to judge whether past returns came from a repeatable operating model or from market tailwinds. The strongest answers describe a system (who does the work, how initiatives are chosen, how progress is measured) and then attach evidence that the system was applied more than once.

This carries more weight than it used to. McKinsey's Global Private Markets Report 2026 found that 53 percent of 300 surveyed LPs ranked a GP's value-creation strategy among their top five selection criteria, and that firms have more than doubled their operating groups since 2021 (McKinsey Global Private Markets Report). More operating teams means more answers that sound alike, so specifics are what set yours apart.

Where value creation shows up in the ILPA DDQ

ILPA publishes a standardized DDQ that many LPs send as-is or adapt. Value creation is not confined to one section: it surfaces wherever the questionnaire asks about the team, the investment process, monitoring and portfolio company policies. Section numbering changes between versions and LPs add their own questions, so map your answers to the exact template you receive.

What to gather before you draft

• The operating team roster: names, titles, tenure, prior roles and the share of time each person spends on this fund's companies.
• How operating resources are paid for (fund, management company or portfolio company) and the policy that governs it.
• One redacted 100-day plan and one quarterly value creation review from a real company.
• An initiative register, current to the last quarter-end.
• The KPI definitions used across the portfolio, so DDQ figures reconcile to board packs; the guide to KPI benchmarking across portfolio companies covers set-up and limits.
• The PPM, the last DDQ you submitted and current marketing materials, so the language stays consistent.

Step by step: drafting the value creation answers

1. Build the initiative register. One row per initiative: name, companies involved, start date, owner, status, metric and how results are attributed. A value creation office usually keeps this already; if not, rebuild it from board minutes.
2. Classify every initiative honestly. Use three labels: repeated (applied at several companies with measured results), in progress (started and measured, not complete) and exploratory (being screened or piloted). LPs trust the first group more when the other two are visible.
3. Describe who does the work. Say whether operating partners sit alongside management, advise from the board or run functional programs across companies, and who pays for their time. The guide to how LPs evaluate an operating partner model covers what they probe here.
4. Walk through the process once, end to end. Diligence findings, the 100-day plan, quarterly reviews, and how initiatives are stopped when they do not work.
5. Prove repeatability with counts. An illustrative line such as pricing reviews completed at six of nine Fund II companies says more than a claim of deep pricing expertise.
6. Separate operations from market effects. Show the value bridge method (revenue growth, margin change, multiple change, leverage) and apply it the same way to every example.
7. Describe exploratory initiatives by status and scope. No projections and no implied results.
8. Reconcile, then review. Check every figure against the PPM and prior DDQs, then send the draft through compliance; the guide to presenting initiatives under the SEC Marketing Rule covers fair presentation of examples.

How to describe a data licensing review without overclaiming

AI questions now appear throughout DDQs (see how GPs answer responsible AI questions), and a data licensing review is one place an operating team can show it is responding to the shift without overstating it. The review screens portfolio companies for operational records that AI developers license for training and evaluation, and introduces qualifying companies to SourceX, which runs inventory, buyer review, contracting and delivery. Each company decides for itself, and any payment is one-time.

If the operating team acts as a referral partner, the economics need to be clear before the DDQ describes the program. Partners earn 25% of the eligible platform fees SourceX collects from a referred company's licensing deals, up to $100,000 per referred company, payable only after the buyer pays and SourceX receives its fee; the reward is never deducted from the company's proceeds. Whether the GP or its staff may accept such a payment, and whether it must be offset against management fees or disclosed as a conflict, depends on your LPA and policies, so take it to fund counsel before anyone registers. This is general information, not legal, tax or financial advice.

Common mistakes

Example answer (Illustrative)

Illustrative and fictional. The question asks the GP to describe its approach to value creation and give examples.

Notice what the example avoids: no projected proceeds, no buyer names, no suggestion that screening equals revenue.

Next step

Add the screening program to your initiative register, list candidate companies with the network opportunity finder and check them against who qualifies. If the team will make introductions, register as a partner once fund counsel has reviewed the arrangement.