A Practitioner's Guide to Measuring, Benchmarking and Reporting Private Fund Returns
Julian R. Sterling
These are the five Excel workbooks that go with the book. Thirty-one of the thirty-three
figures Chapter 19 publishes reproduce exactly — a since-inception rate of 11.07%, a TVPI
of 1.833×, a Kaplan-Schoar PME of 1.239, a PME+ lambda of 0.7739 and Direct Alpha of 3.80%
a year. The two that do not are declared on their own sheet, with the reason. Nothing is
locked, protected or watermarked.
Free to download. No sign-up, no email address, nothing to fill in.
Everything described below is inside it, with the read-me.
The five workbooks
Chapter 19
Meridian Capital Partners IV — the complete measurement
Eight sheets, from the cash flow series to the reporting line: the multiples, both
internal rates of return, the subscription facility test, all four public market
equivalent methods, the gross-to-net bridge, the disclosure sentence assembled from the
cells above it, and a final sheet that puts every published figure next to what the file
computes. Long-Nickels comes out negative here, exactly as the chapter says it will
— which is the clearest demonstration available of why PME+ exists.
The same model with the numbers taken out, for a fund of your own. Enter a cash flow
series and a total return index and it returns DPI, RVPI, TVPI, the realized share, the
since-inception rate, the rate excluding the residual value, Kaplan-Schoar, Long-Nickels,
PME+, Direct Alpha and the test against a policy hurdle. Annual, quarterly or monthly
rows — set the periods per year and the rate annualizes by compounding. It arrives
pre-filled with the Chapter 19 fund so every formula can be seen working before it is
trusted.
PME_Calculator.xlsx · XLSX · 23 KB
Appendix C
Practice cases 1 to 3
All three cases, each with a blue column for your answer beside the live solution.
Case 1 publishes its full cash flow series and is recomputed from first principles.
Cases 2 and 3 publish summaries without the underlying timing, so everything
derivable is derived and everything else is labelled as given and put through a coherence
test instead. That test is worth a minute: inverting each manager's Direct Alpha in
Case 3 recovers the index rate they were measured against, 6.88% and 7.04%, within a
basis point of Chapter 19's 7.05%.
Practice_Cases.xlsx · XLSX · 24 KB
Appendix B
Measurement checklist
All 51 items across eleven sections — the cash flow series, residual value, the
rate, the multiples, distortions, the comparison, peer data, portfolio level, cost, risk
and reporting — with a status dropdown, a notes column and a progress sheet that
counts what is still open by section.
Measurement_Checklist.xlsx · XLSX · 12 KB
Appendix F
The cohort of twenty-four
Chapter 19 says every number is shown and every number reproducible. Seven of its
eight steps deliver numbers; step 7, the peer comparison, delivers none, and
Chapter 11 prints the template with N, X and Y still in it. This workbook fills them
in and sizes what Chapter 12 says cannot be sized. Nine sheets: the cohort fund by
fund; the standard error of a quartile boundary at any cohort size, which is how the
“about twenty” threshold turns out to be sixty-three; the three conventions
for drawing a boundary, which agree on every fund if and only if the cohort size is a
multiple of four; the three biases sized in closed form at 380 basis points for buyout
and 563 for venture; and the probability — 0.82 is the threshold — that a
median fund can call itself top quartile somewhere. Seventy-four controls, all live:
change an input and the controls that depend on it fail, which is how you find out what
your change moved.
The_Cohort_of_Twenty_Four.xlsx · XLSX · 86 KB
Conventions used throughout
Blue text
a hardcoded input — you may edit these
Black text
a formula — do not overtype these
Green text
a link to another sheet
Yellow fill
the assumptions that carry the answer
Two declared variances
The subscription facility case and the gross internal rate of return do not reproduce to the
basis point, and both carry an explanation on their own sheet. In each case the book states a
result without fixing the convention behind it — how the facility's carrying cost is
applied, and how life-of-fund expenses are spread across the years. No single convention
reproduces both published facility figures, so both readings are shown rather than one being
fitted.
That is the honest outcome and it is more useful than a number quietly bent to agree. A file
that hid a variance would contradict the chapter it is reproducing.
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.
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.
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.
If this book helped — or didn’t — a few lines on Amazon are worth more than they look: they are what the next reader goes on. Write a review. The workbook stays free either way.