Single-Asset Vehicles, Sponsor-Led Secondaries and the Investor’s Decision
Julian R. Sterling
Four Excel workbooks. The Thalia transaction of Chapter 18 from first discussion to closing, where
four money figures stated in four separate sentences turn out to tie to each other exactly. Chapter 7’s
pricing arithmetic, including the calculation its argument builds to but never writes down. Chapter 12’s
fee comparison, reproduced to the euro. And the six appendix checklists as working documents.
78 figures are checked against the book.
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Everything described below is inside it, with the read-me.
The four workbooks
Chapter 18
The Thalia transaction, end to end
The situation, the process, the price and structure, the election, and the three things the chapter says still
deserved scrutiny — each on its own sheet, with every number the chapter states in prose put somewhere it can
be tested. The election sheet is the one to open first. Chapter 18 gives four money figures in four separate
sentences: equity of EUR 354.5 million, the syndicate’s EUR 209 million, crystallised
carried interest of EUR 31.2 million, and the EUR 190 million selling investors receive. Nothing
in the text connects them. They connect exactly — fifty-nine per cent of the interests leave, fifty-nine per
cent of the gross equity is what the syndicate funds, and taking the carry attributable to that same fifty-nine per
cent off it gives the sellers’ proceeds. Two percentages and one carry number produce both printed figures,
and the reconciliation tells you which waterfall the chapter has in mind. The scrutiny sheet then puts numbers on
the three questions the chapter leaves qualitative: what the entry premium over the earlier third-party bid costs
rolling investors and what earnings growth would justify it, how much downside cushion the leverage increase
consumed, and what the deployment clock on the unfunded EUR 70 million actually requires.
The_Thalia_Transaction.xlsx · XLSX · 27 KB
Chapter 7
Pricing and the bid funnel
Chapter 7 does three lines of arithmetic and observes that very few election materials do them and no
investor should skip them. Here they are, live: the worked comparison with its three better benchmarks, the capital
structure test that shows why an equity price comparison across different leverage levels is meaningless, and
deferred consideration reduced to present value with a sensitivity table — because the answer moves a great
deal and the inputs are judgements that ought to be visible. Then the sheet the chapter’s argument builds to
but never draws. A rolling investor is, in economic substance, buying the asset at the transaction price, so a high
price is good for those who sell and bad for those who roll. The same asset, the same plan and the same exit run
across a range of entry prices, and the transfer between the two groups turns out to be exactly symmetric. The
sheet also solves for the entry price at which rolling stops delivering a stated required return — which is
what Chapter 10’s question about investing new money at this price actually means.
Pricing_and_the_Bid_Funnel.xlsx · XLSX · 22 KB
Chapters 4, 10 and 12
Fees and the roll decision
Chapter 12’s exercise says most investors have never calculated the total fees and carried interest
payable under a sponsor’s base case, in cash, and are surprised by the answer. This workbook does it. Both fee
scenarios reproduce to the euro, and the difference the chapter describes as roughly EUR 400,000 or eight
points of net multiple computes to exactly EUR 400,000 and exactly eight points. Getting there required solving
for something the book does not state: carry is tiered at 12.5 per cent below a 1.5 times multiple
and 20 per cent above 2.0 times, and the worked example lands at 1.8 — inside the band between,
for which no rate is given. The workbook solves for the rate that reproduces both printed figures and shows what the
alternatives would have produced. Also here: the two-vehicle ten-year fee load, which tests the claim that it can
approach a quarter of the gross gain; Chapter 4’s cost allocation with the amount rolling investors bear
twice; and Chapter 10’s two investors, with the structural check that reaches the right answer in ten
minutes without looking at the asset at all.
Fees_and_the_Roll_Decision.xlsx · XLSX · 26 KB
Appendices B, C, D, E, F and H
Diligence, governance and the conflicts register
The limited partner diligence checklist in seven sections, with the internal constraints last on the page and
first in the running order — because for some investors those five questions settle the matter before the
asset is ever examined. The sponsor process checklist in the order the transaction happens. The conflicts register
with its eight standard entries, each carrying the mitigation the book attaches to it and, crucially, a field for
the residual risk after mitigation: a register whose residual column reads none against every entry has not been
filled in, it has been completed. The ten questions for a fairness opinion provider, with what each answer tells
you. The term sheet review in order of value at risk. Chapter 4’s seven phases with room to record what
actually happened, so the compressed phase declares itself. And the fifteen costly mistakes as a twenty-minute
review.
78 figures are checked against the book across the first three workbooks: 77 reproduce, one differs only by the
book’s own rounding, and none is unexplained. Each line carries its own tolerance, set to the precision the
book actually prints.
Three things are flagged on the sheet where they matter rather than quietly adjusted. Fifty-nine per cent of the
equity net of crystallised carry is EUR 190.7 million against the EUR 190 million
Chapter 18 prints — a rounding, or the transaction costs Chapter 4 says the selling fund commonly
bears; the workbook does not choose, because the chapter gives no basis to. The carried interest rate between a 1.5
and a 2.0 times multiple is not stated anywhere, and is solved from the two figures the chapter prints. And
Chapter 4’s seven phase durations, added sequentially, come to roughly eight to thirteen and a half
months against a stated total of six to nine — so the phases overlap, which the chapter says about the
election without drawing the conclusion.
Opening the files
The workbooks open in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers. They use no macros
and no add-ins, so nothing needs to be enabled or trusted. If your spreadsheet asks to update links on
opening, decline — there are none.
The book these files come from
The Continuation Fund Handbook by Julian R. Sterling. The workbooks reproduce the worked examples in the
chapters; the book is where the reasoning behind them is set out. It is not yet on sale —
these files are published ahead of it.
Closing the DealTwo defensible bridges 20.70 million apart, a peg worth 7.00 million, and the six choices that remove 6.60 of a 12.00 earn-out.
CMBS and CRE CLOsWhere the loss actually lands, from appraisal reduction to realised severity, and what the B-piece is really being paid for.
How to Read a Commercial LeaseThe three refinements chapter 19 names and never performs, and the renewal rate below which the mark-to-market is worth nothing.
How to Read a Credit AgreementWhere the default actually comes from, the cure that costs 5.5 times the other, and the capacity nobody adds up.
How to Read a Real Estate Loan AgreementThe cure ratio in closed form, the four-point window in which the cheap cure works, and the cure sized to the wrong threshold.
Office Real EstateA six per cent yield that returns 3.2 per cent once the re-letting cycle is paid for, and the headline-to-net-effective rent arithmetic.
Private Equity Real EstateBoth worked waterfalls to the dollar, the two capital stacks, and the arithmetic of the promote made changeable.
Private Markets PerformanceThirty-one of the thirty-three figures chapter 19 publishes reproduce exactly — and the two that do not are named rather than quietly adopted.
Raising a Real Estate FundThe chapter 17 funnel run on a calendar — when the first close actually lands, and why more travel does not help.
Real Estate FinanceFour people look at one building and reach four numbers; the lender is whole only above 105,109,489, twelve per cent below today’s value rather than forty.
Real Estate Financial ModelingProperty, development and fund models built line by line, and the modelling test worked end to end.
Real Estate Fund ManagementThe waterfall of 6.11, the build-to-core of 8.7 and the proceeds gap, reproduced as live formulas rather than asserted.
REIT Analysis and ValuationFFO of 532.0, AFFO of 381.0, net asset value and dividend safety — every figure a formula you can change.
Retail Real EstateThe occupancy cost of every unit in a centre, the sixteen per cent of the rent roll no tenant can sustain, and the right-size-convert-or-hold decision priced.
Sale and LeasebackA €179.5 million transaction end to end, with rent cover measured on the entity that actually signs the lease.
Self-Storage Real EstateThe cohort engine behind a 590-unit store, and the rate increase on existing customers priced against the move-outs it causes.
The Fund Finance ProfessionalChapter 8 builds the reported-to-eligible NAV bridge; chapter 9 computes every ratio without it. Two points at every state — and what a subscription line does to the IRR.
The Growth Equity InvestorWhat a pro rata cheque really costs, and the band where defending your ownership loses money.
The Private Credit InvestorThe two coverage ratios are not measured on the same thing: the erosion is 47.7 per cent, not the 28.7 the headline implies.
The Private Equity Fund Controller PlaybookThe book defines IRR, DPI, RVPI and TVPI, tells you to update them at the exit, and prints not one value. Computed: a 1.833× deal inside a fund at 0.892 TVPI.
The Venture Capital AssociateWhat defending a position costs, and how many companies a reserve pool actually defends.
Financial Risk ManagementA fund inside every limit that cannot meet a redemption — and the number that decides it is the one with no currency attached.
Business ValuationThree advisers land 26.8 per cent apart on one company, and the whole gap turns out to be 1.96 points of perpetual growth.
Quantitative FinanceThree models agree to a quarter of one per cent about a number that one unobservable input moves a hundred and three times as much.
Asset ManagementFour people quote four returns for one mandate, all correct and 2.7017 points apart — forty-eight times the manager’s net skill.
Alternative InvestmentsA manager reports 13.29 per cent and the endowment earns 6.26 — both correct, and only a third of the advertised advantage arrives.
Credit AnalysisFour defensible EBITDAs on one borrower give leverage from 3.19x to 6.47x — and the add-back argument is fifty times the covenant headroom.
Venture CapitalOne company out of twenty-eight returns 56.7 per cent of the fund, and half the capital goes in after the decision — at half the return.
Machine Learning for FinanceFive people quote the accuracy of one credit model, all five are right, and the number that decides how much money it makes is none of them.
Commercial Real Estate InvestingThe equity earned 8.6647 per cent and the investor received exactly 8.0000 — the preferred return, and nothing above it.
Mergers and AcquisitionsThe board paper says the deal creates 13,436,667 of value. The arithmetic says it destroys 17,530,855. Nobody is lying.
DerivativesThe treasury report says the hedge cost 1,233,698. That is the interest differential, not a cost.
Treasury ManagementFive cash balances for one company, all correct and 145,600,000 apart — and the revolver that is two-thirds of the liquidity leaves at a revenue fall of 8.4127 per cent.
Financial Planning and AnalysisRevenue 3.0190 per cent above budget and operating profit 16.3209 per cent below it, in the same quarter, with every figure correctly stated.
Energy TradingA position report that is 91.7031 per cent hedged and correctly computed, on a book that is short 2,542,000 MWh — and a margin call of 198,400,000 the next morning.
Construction Cost ControlA contract sum of 26,301,102 became a final account of 29,153,363 on the building that was drawn — and 85.8 per cent of what was lost was knowable on the day it was signed.