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This week we continue our series on best practices of top private credit firms with a look at how underwriting teams partner closely with their internal colleagues to ensure the most favorable execution for their sponsor clients and investors.
Clear communications with private equity partners at the deal screening stage is essential. Quick and decisive feedback (“a quick No is better than a delayed one”) allows them to make contingency plans if a lender group doesn’t materialize along expected lines. Good credit partners can also help structure financings to win deals in hypercompetitive situations.
Consistent and thoughtful feedback over time is invaluable to our competitive position relative to other, less-predictable lenders. Helping to achieve this includes early signaling to sponsors of varying degrees of interest. “Green” (or similar indicator) where we want to proceed to an “early read” Investment Committee discussion. “Yellow” if there are key questions needing to be answered before moving forward. “Red” is a “thanks, but no thanks.” It’s essential all IC members be included in all discussions, otherwise, there’s a risk someone dings the deal unexpectedly at a later date...
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