With thousands of PE sponsors around the world trying to raise new funds, competition is fierce for prospective investors. As the internal rates of return (IRRs) of a manager’s previous funds are the primary metrics used for investors to compare competing managers, it is easy to see why there is concern that some IRR figures are artificially enhanced to help managers stand out from the crowd. To ensure their investment decisions are based on sound information and data, it behooves investors to exercise care when diligencing the IRR calculations marketed to them by managers. To address this issue, this second article in a two-part series identifies specific approaches investors can undertake in their operational due diligence (ODD) efforts to unearth IRR distortions in the fundraising process. The first article detailed some of the fundamental flaws of IRR as a performance metric and some of the steps that senior legal and compliance personnel at sponsors can take to ensure the accuracy of their IRR figures and, in turn, avoid investor and SEC scrutiny. For more on investor ODD, see “Practical Tips for Investors Conducting Background Investigations of Private Fund Managers” (Sep. 10, 2019); and “Preparing for and Navigating Operational Due Diligence Reviews by Investors” (Aug. 27, 2019).