Notes from the deal desk on underwriting, market structure, and the diligence questions that actually move a thesis.
Why the horizontal SaaS playbook misprices growth, customer concentration, switching costs, and market size in vertical market software, and what to underwrite instead.
Deal SourcingMost buyer lists get built backwards, starting from who the banker already knows instead of who actually has a reason to pay up. Here is a better method.
Screening & AnalysisA confidential information memorandum is written to be persuasive, not neutral. Here is what to look for in the first pass, and what almost always gets left out.
Market ResearchTop-down market research reports are built for consumer categories and large horizontal markets. Niche B2B software needs a bottom-up count instead.
Financial ModelingJunior analysts spend the most modeling time on operating assumptions. In most lower middle-market deals, leverage structure and multiple assumptions do more work than the operating case.
Diligence & UnderwritingThe gap between reported and adjusted EBITDA is where a surprising amount of deal risk hides. A framework for telling a legitimate addback from a negotiating position.
Investment CommitteeThe memos that survive an investment committee meeting are the ones that anticipated the hardest question in the room before anyone had to ask it.
Independent SponsorsIndependent sponsors need a capital-partner-ready diligence package without the analyst bench a fund has. Here is what actually needs to be ready, and in what order.
Corporate DevelopmentCorporate development teams often screen for strategic fit first and financial discipline second. That ordering is backwards, and it shows up in the deals that get championed but never close.
Diligence & UnderwritingA follow-up to our piece on underwriting vertical market software. A framework for telling genuine concentration risk apart from concentration that is actually evidence of a durable moat.
Diligence & UnderwritingA follow-up to our piece on underwriting vertical market software. Net revenue retention was built for horizontal SaaS. Here is what to look at instead in a true vertical market.
Financial ModelingWhen a true comp set has two or three names in it, false precision is worse than an honestly wide range. A method for building a defensible valuation view anyway.
Sell-Side AdvisoryThe same set of gaps slows down most lower middle-market sale processes. A checklist for what should be ready before a single buyer conversation starts.
Financial ModelingThe working capital peg looks like boilerplate and is one of the few deal terms that reliably gets renegotiated after signing. Five inputs that actually decide who owes what at true-up.
Diligence & UnderwritingEvery vertical market software CIM asserts high switching costs, and almost nobody tests the claim before underwriting it. Five signals that are actually measurable in diligence.
Diligence & UnderwritingThe EBITDA add-backs are the well-covered part of founder-owned diligence. The red flags that surface late have nothing to do with the income statement.
Diligence & UnderwritingThe standard reference call confirms the CIM instead of testing it. Five ways to restructure the calls already happening so they actually reveal renewal friction and vendor risk.
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