Lenders

We know that evaluating the commercial viability of a business and its prospect for meeting its obligations under credit terms is complex and requires examining risk with an objective view, stress-testing downside scenarios, and learning as much as you can from customers, channels, and competitors in a small windows to exercise decision and seize opportunities without missing factors that later prove the underwriting wrong.

There is no doubt that the decks prepared by many consultancies serving sponsors are exercised in manners that reduce friction for investment committees and also to ensure that lenders have little concern and factor in all the goodness and little of the non-obvious risk factors in the pricing.

When the credit position is sizable and there is too much risk in accepting the sponsors representations and relying on decks that come from very credible sources, but somehow paint to up and to the right on key elements, our credit clients determine that running a narrow scope and proprietary diligence on the worrisome factors to price in, and write loan covenants that reduce unnecessary risk.

Then there are the moments when your existing positions are growing worrisome as signals indicate that covenants may be soon violated and there is merit to get an independent view (independent of what the sponsor is saying and what your board observation and materials disclosures allow you to get access to).

At origination, Matters Graph supports big bet decisions with targeting commercial diligence on downside risks neglected in sponsor materials. Matters Graph also supports credit clients in measuring underperformance and becoming an owner.