Raising Private Markets Capital from Wealth Managers
Julian R. Sterling
One Excel workbook, and it runs a forecast the book describes in full and never
performs. It is free. Nothing is gated behind a sign-up, and no email address is
asked for.
Chapter 15 gives the method in enough detail to build it — in-scope
advisors, a conversion curve by month since launch, tickets per producing advisor,
average ticket, and a redemption rate on aged tranches — then states the
Thornbury conclusion without showing the numbers. This workbook is the model:
eighty-four months, four platforms, one page of inputs.
The conclusion holds. Gross flows rise in every one of the eighty-four
months while the organic growth rate peaks and falls by three quarters. But the
finding worth having is the one the chapter does not make.
There are three peaks and they are years apart. Gross flows never
turn down. Net flows peak at month 44. The organic growth rate peaks at
month 29.
Fifty-five months separate them. The head of distribution reports gross flows and
sees seven years of growth; the chief executive reports the organic growth rate and
sees a business that stopped improving in month twenty-nine. Both are right, and
the gap is four and a half years — long enough for a
distribution team to be praised, promoted and replaced before anyone reconciles them.
Thornbury_Forecast.xlsx · XLSX · 37 KB
Redemption drag is U-shaped, and the middle years lie
The chapter says drag grows with the age of the book. Over seven years it does. Month
by month it does not: 38.7 per cent of gross flow at month 18,
falling to 14.2 per cent at month 36, then climbing to
41.5 per cent by month 84.
Year three is the bottom of the U. It is also, precisely, when a distribution team
first has enough history to build a credible multi-year forecast — and the two
years it can see show drag improving. A team that extrapolates what it can see
will forecast an improvement at the exact moment it is about to reverse. The
remedy is in the model, not in judgement: redemptions modelled as a rate on aged
tranches produce the U-shape by themselves.
A miss has a signature
The chapter promises that a forecast miss tells you whether conversion, ticket size or
timing was wrong. It does. Measured at month 36: a two-point fall in the conversion
ceiling costs 11.1 per cent of flow but only 6.6 per cent of assets; a
ten per cent smaller ticket, 10.0 and 6.0. A three-month launch slip costs the
least flow — 5.5 per cent — and the most assets,
11.6 per cent.
So flows and assets short in proportion points at conversion or ticket size; flows near
plan with assets well short points at timing, and at a problem that happened earlier
than the month being read.
What it would take to hold the line
Holding a 30 per cent organic growth rate at month 60 needs 24 per cent more gross
flow than the model produces. That cannot come from working saturated platforms harder;
it has to come from new ones, which take nine to twelve months from approval to
production. So the decision had to be taken around month 48 —
a year before anyone was looking at the shortfall. The cohort model does not merely
forecast. It dates the decision.
Conventions used throughout
Amber fill
an input — you may edit these
Grey fill
a formula — do not overtype these
Checks sheet
twenty-eight controls, each stating its own verdict
Every firm and figure is illustrative, as everything in the book is. What is not
illustrative is the shape of the result, which holds for any plausible set of inputs.
The three peak months on sheet 4 are computed, not typed — change an assumption
and they move.
Opening the file
The workbook opens in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers. It
uses 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.
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.
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