Sponsor diligence checklist template
This template gives a sponsor diligence checklist a fixed set of fields to complete for one sponsor and one offering. A capital raiser, family office analyst or limited partner reviewer fills it in from the sponsor’s documents and from direct written answers.
The template
| Field | What to record | Why a reviewer cares | Your entry |
|---|---|---|---|
| Three year financials | Annual income statements and balance sheets for the sponsor entity covering three years, with the accountant’s report noted for each year and the preparer named. | Multi period statements let a reviewer test whether reported revenue and debt levels move consistently, and expose a single strong year that masks weaker ones. | |
| Interim financials | Year to date income statement and balance sheet with the closing date of the period shown, prepared on the same basis as the annual statements. | Recent results reveal current trading and cash position, and a gap between the latest annual statements and today leaves a reviewer working from stale figures. | |
| Track record span | Number of years the sponsor has operated and which market cycles, rising & falling, those years include, with the first and latest acquisition noted. | A history that spans up and down markets shows behavior under stress, and a younger firm’s earlier results predict future performance only loosely. | |
| Net investor returns | Realized net IRR and equity multiple after fees and promote for each completed deal, as received by limited partners, listed beside the original target. | Net figures show what investors kept, and steady results from deal to deal can indicate the sponsor’s risk profile. | |
| Asset level track record | One entry per property with acquisition and sale dates, purchase price, business plan, projected versus actual returns, and the sponsor’s role in the deal. | Property level detail ties headline returns to specific assets and shows which deals carried the portfolio and which fell short of projections. | |
| Sponsor net worth and liquidity | Verified net worth and cash or marketable securities held by the principals, stated in dollars as of a named date, with any pledged assets excluded. | Liquidity indicates whether the principals can cover guarantees and cost overruns without turning to investors. | |
| Credit history | Personal credit report summary for each principal giving a loan guarantee, with the score and any open delinquencies or collection accounts noted. | Credit standing signals how the principals handle their own debt, which lenders weigh when sizing and pricing the loan on the property. | |
| Defaults, litigation, bankruptcies | Written answer for each principal and entity on loan defaults, lawsuits, judgments & bankruptcy filings, with the court, case number and outcome for each item. | Past defaults and disputes show how the sponsor behaves when a deal goes wrong, and an incomplete answer prompts a search of court records. | |
| Leadership backgrounds | Biography for each principal and senior team member with years in real estate, prior employers, roles on past deals and the share of time given to this business. | Investors back people, so the depth of the team and each member’s experience shape confidence that the plan can be carried out. | |
| Communications approach | Reporting schedule, investor update format and sample quarterly letter, plus the contact who answers investor questions and the typical response time. | Frequency and candor of reporting indicate how bad news will be handled, which matters most after a deal departs from its business plan. | |
| Offering specific tailoring | Extra questions added for this particular deal, such as the asset type, the debt terms and the exemption used under Regulation D, with the reason for each. | Investigation is meant to fit each Regulation D offering, and mechanical use of one standard list may leave the specific risks unexamined. | |
| Property feasibility scorecard | Scored assessment of the property covering real estate feasibility and business feasibility, with a rating for each category and notes on the lowest scores. | Rating each property on the same scale makes weak spots visible before capital is committed and allows comparison across deals. | |
| Diligence condition | Contract language making the purchase subject to satisfactory diligence, with the review window length in days and the party who decides whether findings are satisfactory. | Diligence exists to learn about a business and surface problems, and a condition gives the buyer a defined exit if those problems appear. | |
| Investor questions | Custom questionnaire built from questions investors have already asked, cross checked against the sponsor’s offering materials and past communications, with answers and page references. | Questions drawn from real investor concerns catch topics a generic form omits, and consistent answers across documents build confidence in the sponsor. |
How a reviewer uses a completed template
A reviewer usually starts with Three year financials and Interim financials, checking that the most recent period connects cleanly to the earlier ones. Track record span and Net investor returns come next, since together they show how results held up when markets turned. Asset level track record then supplies the property by property detail behind those totals. Sponsor net worth and liquidity sits beside Credit history, because both speak to whether the principal can stand behind obligations. Leadership backgrounds indicate who will actually run the asset and answer to investors.
Each field answers a question. Gaps in any field get followed up with the sponsor. Offering specific tailoring matters here, since one pass through every field may miss risks particular to a single deal. Property feasibility scorecard results then feed the Diligence condition that the buyer negotiates well before closing.
Common gaps in a completed template
Interim financials often arrive without a clear comparison to the Three year financials, which leaves a reviewer unable to tell whether a single weak quarter or a longer slide explains the drop in income. Track record span frequently covers only rising markets, so Net investor returns say little about a downturn. Asset level track record entries sometimes list sales and omit assets still held. Credit history is occasionally left empty. Defaults, litigation, bankruptcies may read none with no search behind the answer. Offering specific tailoring is often skipped.