A Practitioner's Guide to Direct Lending, Underwriting, and Portfolio Management in Private Markets
Julian R. Sterling
These are the workbooks and documents that go with the book. The four original workbooks reproduce
the figures it prints — the Halstead coverage ratios of the modelling chapter and the Ridgeline
bridge of the appendix. Around them: the same models with the inputs emptied, four printable working
documents, a question book that marks itself, and three cases the book names and never takes to a
number. Every number is a live formula. Nothing is locked, protected or watermarked.
Free to download. No sign-up, no email address, nothing to fill in.
Ten workbooks, the printable documents and the read-me. Each group below can also be
downloaded on its own. Last revised 22 September 2026.
The four workbooks
These carry the book’s own figures, so that every number it prints can be traced to a live
formula.
Download these four64 KB
The modelling chapter
The lender's model
The Halstead Precision Components case, live. The chapter underwrites a unitranche at 6.25x leverage
and publishes two numbers — a fixed charge coverage ratio of 1.7x in the base case and
1.15x in the downside, thin but still above 1.0x. This file computes both. Switch the case on
sheet 1 and the whole five-year model re-runs; the stress case, a 20 percent decline with margins
at 15 percent, returns 0.93x — which is the chapter's argument made arithmetically. There
is also a panel for the parts of the business that are not seasoned, and a flag for any that has not
been stressed separately.
Lender_Model.xlsx · XLSX · 18 KB
Appendix C
Underwriting and diligence checklist
Worked out into its sections: financial information, the business, legal and structural, collateral
and security, structure and terms, conditions precedent, and what must be true before the deal reaches
committee. Thirty-three items with a status dropdown, a notes column and a progress sheet.
The twenty practitioner questions, each with what it is testing and a self-score, and the credit
committee memo outline as a fillable structure with what each section is for. Useful in two directions
— for a candidate preparing, and for a reviewer assessing readiness.
Interview_and_Memo_Prep.xlsx · XLSX · 12 KB
The fund economics chapter, and the appendix
The Ridgeline bridge, line by line
The book tells a story about Ridgeline Credit Partners’ Fund IV: eleven per cent
gross, roughly eight net, and an investor relations team that could walk a prospective LP
through the bridge in detail, line by line, showing precisely where each
percentage point went. It does not show a single line. This workbook shows them.
The arithmetic works — 11 per cent gross does produce 7.84 net. But building the
bridge reveals that the two numbers are not measured on the same thing.
Eleven per cent is a yield on assets; 7.84 is a return on equity. Between
them sits a turn of fund leverage, which is not a fee and not a loss — it is a
different denominator. On a consistent base the gross is 15.00 per cent and
the erosion is 47.7 per cent, not the 28.7 the headline framing implies.
Three more figures the chapter names without pricing. The word “invested” in
“1.5 per cent on invested capital” is worth 1.20 points of net return
— fifteen per cent of everything the LP receives, depending on whether it
means the LP’s capital or the fund’s assets. Leverage from zero to two turns
buys 1.04 points of return and costs 4.67 points of loss tolerance:
four and a half points of safety surrendered per point gained. And a five
per cent position recovering twenty cents costs more than a full year of
the fund’s net output.
Ridgeline_Fund_Economics.xlsx · XLSX · 16 KB
The same models, on your own deal
The lender’s model and the Ridgeline bridge, with the same formulas and every input emptied.
Type your own borrower or your own fund into the blue cells and the model runs.
Blank set · two workbooks
Your borrower, your fund
Nineteen inputs on the lender’s model: the business, the structure, the covenants and
the three cases. Ten on the fund bridge: leverage, yield, cost of debt, the fee and its base,
expenses, losses, the preferred return and the carry. Each workbook closes on a checks sheet
that counts the inputs still empty and runs the tests that hold on any deal: debt never
negative, cash never below the revolver, a downside margin below the base margin, a stress
harsher than the downside, a leverage covenant set above closing leverage.
Put the book’s inputs back and the book’s figures come back with them: 1.70x,
1.15x and 0.93x on Halstead; 7.84 per cent net and 47.7 per cent real erosion on Ridgeline.
Five pages to print and take into a meeting. A4, with margins wide enough for US Letter.
Appendices B and C · monitoring · amendments
Four working documents
The thirty-three-item underwriting and diligence checklist, with a status, an owner and a
note for each item. The credit committee memo outline, one box per section. The one-page
quarterly credit snapshot the monitoring chapter describes: trailing revenue and EBITDA against
the underwriting case, leverage and coverage against the covenants, any deviation above ten
per cent explained, and the early-warning signs ticked off. And an amendment, waiver and
forbearance form built on the chapter’s rule that a waiver is a negotiation, not a
courtesy: what is asked, why, what the fund receives in exchange, and the three forbearance
conditions of the Bellamy example.
A workbook that marks itself. Answer in the yellow cells; the marking fills in as you go.
All chapters
Thirty numerical, ten multiple choice
The numerical questions work the book’s own cases: Halstead’s coverage and
leverage, Aster’s first-out and last-out, Calloway’s yield against its IRR, the
Ridgeline bridge and the loss rate the fund can survive. They are marked against a tolerance,
so a reasonable rounding passes. The score sheet counts the wrong answers by chapter, which
gives the only revision list worth having.
Nothing is hidden. The marking sheet holds every answer, every tolerance, and the reason for
each answer.
New material, not a restatement. Three situations the chapters name in passing and never take to
a number. Each case is one workbook: the note is the first sheet, the model is the rest, and a
checks sheet closes it. Type your own figures in and every finding recomputes.
Case one · extends the stress case
The stress that lasts
Halstead stressed for two years instead of one, with customers paying later while it lasts.
The company never runs out of cash: liquidity falls from 15.0 to 10.5 and recovers. But both
covenants break for two years, coverage at 0.93x and 0.96x, leverage at 11.3x and 11.1x, and
the equity cure the leverage covenant would demand is 22.1, twice the company’s entire
liquidity. The breach is not a payment problem; it is the lender’s seat at the table
while the borrower can still pay. The note prices the amendment the monitoring chapter
prescribes, and shows why working capital, which cost more cash than the coverage shortfall,
never appears in the coverage ratio at all.
Case two · extends the Calloway pricing example
What the term sheet does not say
The same loan earns 11.7 per cent if repaid in year one, 9.6 in year two and 8.9 held to
maturity: the yield to maturity the term sheet quotes leaves out 0.74 points of the return the
fund actually expects. Then the Brightwater choice, priced: 25 basis points of spread and 0.44
points of OID cost exactly the same over a two-year life, but if the loan stays four years the
spread cut costs more, because it is paid every year and the OID only once.
Case three · extends the Aster unitranche
One loan, two risks
Aster’s $140m unitranche split into an $85.2m first-out and a $54.8m last-out. On
declared spreads, the retained last-out earns 2.33 points a year more than the loan as a whole.
After two quarters of margin compression, EBITDA is 15 per cent lower and the last-out has
moved from 3.5–5.75x to 4.1–6.8x without a dollar of new debt. Sold at 5x, the
whole unitranche recovers 74 cents; the first-out is repaid in full and the last-out recovers
33, a loss equal to about twenty-nine years of its extra coupon.
The book publishes the two coverage ratios without publishing the model behind them, so two inputs
are calibrated so that both reproduce exactly: the all-in cash coupon and capital expenditure as a
share of revenue. Both are ordinary inputs on the first sheet. Everything else is used as the text
states it — 6 percent growth, 22 percent margins, 6.25x leverage, a 12 percent revenue decline
and a 17 percent margin in the downside.
Note where the leverage covenant sits: above the downside level rather than close to closing
leverage, which is what the book describes when it says the downside result informed where the
covenant was set. Tighten it and watch the downside turn into a breach.
Reader list
Optional. One email when a companion file is corrected or a new worked case goes up, and a short note when a new book comes out. Nothing on this page needs it.
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.
What changed, and when
22 Sep 2026
Blank model set, four printable working documents, the question book
and three new cases added. Read-me rewritten.
22 Aug 2026
The Ridgeline bridge workbook added.
12 Aug 2026
First publication of the workbooks.
Articles on this book
How much room a 1.15x downside actually leaves79 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.
Also by Julian R. Sterling
The other books with companion files. The full list of titles is on the
author page.
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 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.
Pricing StrategyA list price of 148.00, a pocket price of 112.51, and the nine deductions in between — with what one point of price is actually worth.
Trade FinanceSix routes to payment on one 4,200,000 export order cost between 178,040 and 223,268, a spread worth 14.8 per cent of the margin, and a day of buyer credit costs 1,031.76.
Cost AccountingOne factory costed twice on the same 13,440,000 of overhead, and 4,053,091 moves between four product families.
Contract ManagementA bid 5.50 a unit cheaper, signed on paper worth 9.81 a unit more — and 94.68 per cent of it was knowable on the day of signature.
Capital MarketsFour defensible readings of one bond, the cost of an issue under each convention, and the placement discount computed at a constant discount.
Financial RegulationThree ratios pass and the fourth is in breach by 1,956.0 million: the output floor, the liquidity buffer after encumbrance, and the loan split.
Bank ManagementFour defensible readings of one balance sheet, the deposit beta measured two ways, and the liquidity that lasts 3.9 days.
The Real Estate WorkoutFour ways out of one broken loan, discounted to today, and the 58.7 cents at which a payoff beats enforcement.
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