- Before
- “I read the first ten pages of most memos and the whole of very few.”
- Now
- Opens every memo already marked up against the mandate, with leverage on the fund’s own EBITDA, and spends his time on the deals that fit.
One memorandum, from data room to approved pursue
The Project Lantern data room opens at 07:58 on Monday 12 October: a 118-page CIM, a 34-page QoE summary and the model, with the IOI due Friday. Here is what happens next, screen by screen, in the working solution.
- 01Monday morning
His day opens on the memo, already marked up
Daniel Okafor · Vice President, UnderwritingDaniel does not open a dashboard. He opens the Lantern CIM, read on arrival between 07:58 and 08:04 by six agents. Every sentence a mandate test depends on is highlighted green, red or amber, with a numbered margin note naming the mandate clause and the limit. Above it, a fit of 72, the verdict and a strip of all twelve Fund IV tests; beside it, this week’s other memos, each with its own strip.
“Pursue at up to 5.50×, not as asked — 10 of 12 pass”
- 02Page 5
The banker’s leverage sentence turns red
Mandate and portfolio tester“Total leverage of 5.3x Adjusted EBITDA of $54.2 million” is highlighted red. The margin note says the fund’s EBITDA is $46.9M, which puts the $285M ask at 6.08×. With past pass reasons on, the note also links to the three industrial-services deals the fund passed above the same limit: Holcroft Testing, Corliss Compressor Service and Tamsin Pump & Seal, with who decided and where each one is now.
“Mandate max 5.75× — fund passed 3 similar deals.” Two are now in trouble.
- 03One click
What if half the Delmont synergies count?
Daniel Okafor · Vice President, UnderwritingFrom the note, Daniel tries half the Delmont Valve synergies, which is what the add-back policy allows once they are actioned. Our EBITDA rises to $48.55M and leverage falls to 5.87×. Still red. At the 5.75× limit the fund could lend $279M, not $285M.
- 04This week
Every deal in the pipeline, ranked by fit
Daniel Okafor · Vice President, UnderwritingThirty-one memos came in this week and all 31 were read the day they arrived, 1,914 pages in all. Eleven are in the pipeline, ranked by fit, each showing EBITDA on the sponsor’s number and on ours. The other 20 were passed on the teaser. Kiln, a burger chain, stops at the sector test because restaurants are excluded, and Basalt shows 8.05× on our EBITDA with add-backs at 41%.
- 056 min 12 s
The one-page screen, every figure with its page
The six agentsThe screen shows each agent’s step in order. The intake reader confirms the confidentiality agreement was signed on 5 October. The financials extractor pulls 64 figures, each with its page. The earnings quality analyst sorts the five add-backs and the tester runs all 12 tests. Four red flags follow, each linked to the CIM or QoE page it came from.
“Finished in 6 min 12 s · 6 agents · 192 pages”
- 06Earnings quality
From the sponsor’s $54.2M to the fund’s $46.9M
Earnings quality analystThe EBITDA bridge takes each sponsor add-back in turn. ERP implementation, founder compensation and the Toledo branch consolidation are accepted, $5.1M in all, each supported by a QoE page. The $3.3M of Delmont synergies (identified, not actioned) and $4.0M of run-rate pricing (not in the twelve months) are rejected. The leverage meter puts the sponsor at 5.26×, the proposal at 5.50× and ours at 6.08×.
Never accepts a synergy or price increase not yet earned. A person may change a treatment, with a reason that is kept.
- 07Mandate and portfolio
Twelve tests, after the proposed $90M hold
Mandate and portfolio testerTen pass and two fail: total leverage and add-backs (22.9% against a 20% cap). Top customer Ardent Gulf Refining is a watch at 18.4% against 20%. Each test names its source, from the CIM page to the process letter or fund records. The portfolio view shows industrial services rising from 11.6% to 14.4% of invested capital, under the 15% cap, and qualifying assets at 88.9%, above the 70% minimum.
- 08Sponsor and comparables
What the fund already knows about Harrowgate Lane
Sponsor and comparables researcherThe researcher reads the fund’s own records: six deals with Harrowgate Lane since 2019, four active and two repaid, no defaults, and one amendment, a 2024 covenant reset at Bellmoor Dental Partners where the sponsor put in $18M of equity. Average leverage at close was 5.13×. Comparable industrial-services loans closed at 5.00× to 5.50× and are performing.
- 09Decision
Pursue at 5.50×, with six questions
Daniel Okafor · Vice President, UnderwritingThe screen writer sets out three options. Pursue at up to 5.50× our EBITDA, a $258M unitranche at S+550 with OID 98.0 and a $90M hold, inside every limit. Pursue as asked, which needs an exception from the investment committee. Or pass, with a note to the banker. Daniel keeps the first. Six first diligence questions and a note to Pellham Stroud are drafted, and nothing is sent until the decision is made.
The screen writer never sends anything and never decides pass or pursue.
- 10Approved
Elena approves pursue, and the questions go out
Elena Marsh · Head of UnderwritingDaniel signs his recommendation, recorded as “I have read this screen and recommend it”. Elena Marsh approves spending diligence money on Lantern. Only then does the note with six questions go to Pellham Stroud, and the decision and its reason are kept in Decisions.
“Elena Marsh approved pursue · questions sent to Pellham Stroud”