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83 worked questions from the practitioner guides — each one a figure that moves, and the reason it moves.
These are the calculations that get stated as conclusions elsewhere: what a recovery is worth once you account for what it is paid in, how a catch-up is solved rather than looked up, why a promote can go to nothing on a five percent move in exit values. Every figure below is a live formula in one of the free companion workbooks.
Companion workbooks: /distressed
A worked capital structure at three enterprise values. The break migrates from the first lien to the subordinated notes without a single document changing.
Composition and time do more damage to a recovery than the headline number suggests. Two arithmetic steps most screens skip.
Companion workbooks: /fundcontroller
Most write-ups state the catch-up formula then hardcode the answer. Set it as a solve and it moves on its own when the carry rate does.
Five findings in one quarter-end close, and not one of them was a modelling error. Every one was a control that did not exist.
Companion workbooks: /pere
Carried interest is not proportional to performance near the hurdle. It is a step function, and $2m of headroom is what stands between a promote and none.
The same deals, the same total profit, two calculation orders — and a $9M promise to repay that is only as good as the entity that made it.
Companion workbooks: /familyoffice
A five-person office costs the same $2,442,000 at $100m as at $2bn. Against a tiered multi-family schedule the two curves cross exactly once.
Companion workbooks: /investorrelations
7.12 per cent, 18.04 per cent, or 1.323 times the public market — one fund, one set of flows. The eleven-point gap is the valuation, and it is not cash.
Companion workbooks: /vc
Holding pro rata to the Series D costs $14.76m per company. A $40m reserve defends 2.71 of forty — and 61 per cent of the cost is the last round.
Companion workbooks: /money
£81.53 leaves the account and £20.46 reaches the debt. On minimums alone the set clears in 258 months and repays 1.78 times what was borrowed.
Companion workbooks: /investing
One point on the annual charge turns 738,846 into 567,961 over forty years — 23 per cent of the pot, and 2.43 of wealth lost per 1 of fee.
Companion workbooks: /evergreen
A drawdown fund advertising 13.25 per cent ties an evergreen netting 8.64. On committed rather than called capital, 78.7 per cent of the edge vanishes.
Companion workbooks: /secondaries
The seller’s floor and the buyer’s ceiling are one formula at two rates. At equal required returns the zone is exactly zero — here it is 11.02 points apart.
Companion workbooks: /loanagreement
233,192 against 2,602,535 on the same breach. The ratio is 1/(k·c) — it ignores the size of the decline and turns on two terms the borrower negotiates.
Companion workbooks: /limitedpartner
37 basis points, and a 22.8 per cent total-loss rate erases it. At the usual per-deal cap a single failure is 37 per cent of the annual cohort.
Companion workbooks: /growthequity
Defending costs 1.25 times the initial cheque across two rounds, not more in each — and below a 521 exit the follow-on dollars come back worth less than they cost.
Companion workbooks: /odd
Three of twelve managers carry a terminal flaw and the average approves all three. Splitting eight domains into sixteen makes it easier to hide, not harder.
Companion workbooks: /redebt
A 350 basis point margin advantage becomes 3.4 points of return on capital — and vanishes if the default estimate is 1.45 times out.
Companion workbooks: /lease
5,788,000 becomes 807,365 once the over-market stream, the expiry dates and the cost of re-letting are priced — and nothing at all below a 43.7 per cent renewal rate.
Companion workbooks: /fundfinance
20 per cent becomes 38.41 on the same asset while the multiple falls. Two dollars of interest buys 18.4 points, and the longer the line runs the cheaper each point gets.
Companion workbooks: /lpa
24 million recovers 13.20 net of tax and 7.20 is escrowed. The rule is e ≥ 1 − t, and every euro won on the tax clause lands uncollateralised.
Companion workbooks: /euaml
Month 8, on a one-year window and a 14-week hiring lead time. The date is 12W − L/4.33 and holds for any portfolio size — the book only changes the euros.
Companion workbooks: /privatecredit
79 basis points of margin. The leverage covenant fails first, five basis points before the coverage covenant the chapter reports on, and 4.6 per cent of EBITDA is the whole cushion.
Companion workbooks: /cbam
Carry and protection are both linear in the buffer, so the break-even probability is identical at 5 per cent and at 30 — and 2027 costs exactly twice 2026.
Companion workbooks: /coinvestment
0.019 turns under plain dilution, 0.285 under pay-to-play. The optimum is a property of the shareholders’ agreement, not of the portfolio.
Companion workbooks: /duediligence
Eighteen basis points is only the part that reaches the yield. Three of the four instruments never do, and the exercise is worth thirty-one.
Companion workbooks: /workout
463,000 euros of present value a month. No single error about enforcement, and no pair of errors, moves the indifference point from 58.7 cents to the 72 on the table.
Companion workbooks: /treasury
67.4567 per cent of the headroom, and it leaves at a fall in annual revenue of 8.4127 per cent — not the 13.3333 per cent the board deck implies.
One balance sheet, five correct answers, 214,000,000 down to 68,400,000 — and the definition alone is worth 0.3690 turns of leverage.
66,049,315 released, and leverage of 2.7622× or 3.1362× depending on which balance the test is asked of — the second is a breach at today's EBITDA.
Three components, 124,596,281 in total — and the double count that turns a margin of 27,403,719 into an apparent shortfall of -3,988,281.
An annualised 14.8980 per cent against a revolver at 4.50 per cent — worth 5,471,890 a year, and 0.3132 turns of reported leverage.
78.1818 per cent of gross debt fixed, and a net floating exposure after cash of -608,000.00 — the proportion, not the instrument.
A loss of 8,130,844.04 against spot, and the hedge did exactly what it was for — the break-even is the forward, not the spot.
361,824.00 between the best and worst yield, and 93,204,281.16 of the surplus already spoken for.
Nineteen lines, each with the covenant or limit it is measured against — and 27,403,718.84 without the revolver on every one of them.
Companion workbooks: /abf
Base loss 2.4 per cent, downside 6.0 and transition 1.5: the advance rate lands at 88 per cent and 12 per cent enhancement.
Companion workbooks: /aifmd
A semi-liquid credit fund's reverse stress level, computed: 17.2 per cent of net asset value against a 4 per cent gate.
Companion workbooks: /alts
A net IRR of 13.2935 per cent, a sleeve return of 6.2571, and a 2.9307-point treasury decision nobody minuted.
Companion workbooks: /ardennes
The commission on a EUR 385,225,000 placement was 13.50 per cent of what it cost. The other 86.50 per cent was uninvoiced.
Companion workbooks: /bizval
Three methods, 18,480,000 apart on one company. Back each into the model and the entire gap is 1.96 points of growth.
Companion workbooks: /buffer
A 40.8 million additional tier 1 shortfall takes 13.6 basis points out of the buffer: headroom is 2.8432 per cent, not 2.9796.
Companion workbooks: /cfh
Blind-pool terms cost a rolling investor about €400,000 on a €5 million position — eight points of net multiple.
Companion workbooks: /closing
€1.30 million a year of ordinary accounting entries removes €6.60 million of a €12.0 million earn-out.
Companion workbooks: /cmbs
Marlowe Tower sold at a 25.90 per cent shortfall; the trust wrote off 37.24 per cent. Where the 11.34 points go.
Companion workbooks: /compliance
59 clean allocations prove an error rate below five per cent; twenty prove only fourteen.
Companion workbooks: /covenant
The add-back bridge is worth 1.6866 turns of leverage; the 4.25x covenant leaves 0.0336 of a turn. A ratio of 50.3.
Companion workbooks: /credit
A 50 basis point MFN steps the margin from E + 550 to E + 700 and pays existing lenders €2.06 million a year.
Companion workbooks: /datacenter
A twelve-month energisation slip costs 399 basis points of levered return; an eight per cent rent miss costs 257.
Companion workbooks: /deal
Treating 4,150,000 of operating leases as debt moves year-one accretion 4.1351 points. Both legs of that treatment are wrong.
Companion workbooks: /development
16,000 a year of rent conceded shows as 145,727 in the appraisal and costs 278,261 in the price — 1.91 times.
Companion workbooks: /esg
€1.1 million of delivered EBITDA at 8.5× is €9.4 million of enterprise value, against €830,000 of cost.
Companion workbooks: /estate
The promote peaks at 2,993,873 at 65 per cent gearing and falls to 2,876,129 at 70, while the equity return still rises.
Companion workbooks: /finance
Twelve years of 520,000 over-rent comes to 6,240,000 against an over-price of 7,619,048. The buyer is never repaid.
Companion workbooks: /franchise
A bank showing 639,600 of CET1 capital is worth 278,809 to a buyer, once the loan book is marked.
Companion workbooks: /fundmanagement
A 20 per cent promote paid $17,200,000 on $70,000,000 of profit — 24.6 per cent. The definition, not the rate, decides.
Companion workbooks: /hedge
A locked five-year hedge calls 4.48 times the margin of a rolling one and exhausts 36,000,000 of liquidity at 7.09 per cent.
Companion workbooks: /infrastructure
A constant WACC against amortising debt values this concession at 263.05, not 242.18 — an overstatement of 8.6 per cent.
Companion workbooks: /insurers
No look-through pack means 49.00 per cent, not 18.90 — €45.2 million of capital on a €150.0 million allocation.
Companion workbooks: /jv
The same 1.5 times dilution leaves a defaulting sponsor on 7.04 per cent or 2.99 per cent, depending on the formula.
Companion workbooks: /logistics
A five per cent labour saving is worth 32 per square metre of rent, a 36 per cent premium. Property is 10.2 per cent of cost.
Companion workbooks: /mandate
Time-weighted 4.8012, money-weighted 4.1272: flow timing cost the scheme 6,357,745.18 and appears in no report.
Companion workbooks: /model
The optimum cut-off moved from 550 points to 580; the policy did not. One year of that inertia cost 2,713,298.
Companion workbooks: /office
Quoted at 6.00 per cent, this office returns 3.20 per cent once the re-letting cycle is deducted: €160.04/m² a year.
Companion workbooks: /operatingpartner
Organic operating improvement contributes 59.85 million whether the deal is levered 3.5 times or 6.5 times.
Companion workbooks: /pbsa
A nomination quoted at 8.8 per cent off the rate is really 21.2 per cent: 6 unpaid weeks, £153,568 a year.
Companion workbooks: /pmp
Three funds at 11.52, 10.12 and 19.51 per cent average to 13.72 per cent. Pooled, they earned 11.78 per cent.
Companion workbooks: /quant
Monthly rebalancing leaves a standard deviation of 2.3031, 20.1 per cent of premium; daily leaves 0.5265.
Companion workbooks: /raising
A 100,000,000 first close at 1.5 per cent pays 125,000 a month against a 200,000 burn: the house loses 75,000 a month.
Companion workbooks: /ream
The plant package saves 1,400,000 on the contract and loses 501,000 at the exit, where the buyer prices its remaining life.
Companion workbooks: /refm
Two downside moves together cost 5,906,035, not the 6,220,557 they sum to: the cross term is 314,523.
Companion workbooks: /reit
REIT acquisitions turn dilutive at a 6.2 per cent discount to NAV, not at zero — 11.6 per cent funded at the target mix.
Companion workbooks: /resecondaries
An 18 per cent discount to reported net asset value is worth 9.18 per cent once three computable deductions are made.
Companion workbooks: /retail
An anchor paying €561 600 exposes €1 985 894 of rent when it leaves — 3.5 times its own rent.
Companion workbooks: /risk
A four-sleeve credit fund's diversification is worth 0.767 of a point; only 27.6 per cent of it survives a crisis.
Companion workbooks: /senior
At 1.80x cover and a 6.0 per cent yield the buyer pays 9.26x EBITDARM, not 11.00x — £2,661,227 apart.
Companion workbooks: /slb
The over-rent implies 269 basis points of credit spread, against 385 on the tenant's own bonds.
Companion workbooks: /srt
Risk-weighting a retained 1250 per cent position costs 168.75 per cent of face at a 13.50 per cent target; deduction costs 100.
Companion workbooks: /statements
Gross fee 4,312.50, offsets 2,175, net 2,137.50. Recomputing a private fund's management fee quarter by quarter.
Companion workbooks: /stor
The £141 discount buys a customer worth £2,188 — and is only 52.7 per cent of what a move-in really costs.
Companion workbooks: /valuation
The protective-put method peaks at 28.6 per cent and cannot reach a conventional 30 per cent discount at any holding period.
Companion workbooks: /venture
151,970,000 called against a 150,000,000 commitment: the recycling clause, and the 1,970,000 nobody signed for.
Companion workbooks: /wealth
The growth rate peaks at 48.1 per cent in month 29; gross flows are still climbing at month 84. Both numbers are right.
Ten of the books come with companion files — working models, empty templates and checklists, with every published figure reproduced in a formula. They are free, and they need no account and no email address.
See all companion files → · All titles by Julian R. Sterling →