DDQ (Due Diligence Questionnaire)
A DDQ (due diligence questionnaire) is a structured set of questions one organization uses to assess another before investing with it, buying from it or renewing a relationship. It covers areas such as ownership, governance, operations, compliance, security and finances, and it recurs, so answers must stay consistent over time.
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01Where DDQs come from
DDQs are most standardized in investment management. The Institutional Limited Partners Association (ILPA) publishes a due diligence questionnaire that investors use when evaluating private equity funds, and the Alternative Investment Management Association (AIMA) publishes illustrative questionnaires that investors send to hedge fund and other managers. Companies also send their own DDQs to suppliers as part of onboarding and third-party risk management; those often overlap with a security questionnaire.
02What they ask
Typical sections cover the firm and its ownership, key people and turnover, the investment or service process, operations and technology, compliance and regulatory history, legal matters, information security, business continuity, environmental and social policies, and financial condition. Many questions ask for documents rather than prose: policies, audit reports, organization charts and financial statements.
03Why consistency matters
The same firm answers DDQs from many counterparties, and the same counterparty sends a new one every year or two. Reviewers compare this year's answers with last year's and with what they hear from the firm elsewhere; an unexplained change reads as a risk. Keep one maintained set of approved answers, each tied to the policy or document it comes from, record when each was last reviewed, and update an answer when the underlying fact changes rather than when the next questionnaire arrives.
04How to respond
For how DDQs fit alongside other solicitation types, see the DDQ explainer.
DDQ: common questions
How is a DDQ different from an RFP?
An RFP asks how you would do specific work and at what price. A DDQ asks about your organization itself, such as ownership, controls, compliance and financial health, so the requester can judge the risk of working with you. A DDQ often accompanies or follows an RFP.
How often should DDQ answers be updated?
Whenever an underlying fact changes, and at least on the requester's review cycle, which is often annual. A dated, approved answer set makes each new questionnaire faster and keeps answers consistent.
Can a standard DDQ replace the requester's own form?
Sometimes. Many investors accept an up-to-date ILPA-style or AIMA-style DDQ as a starting point and then send follow-up questions. Ask before substituting; some requesters require their own form.
Sources
- Due Diligence QuestionnaireInstitutional Limited Partners Association (ILPA)
- Due diligence questionnairesAlternative Investment Management Association (AIMA)
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