These are the companion files of Operational Due Diligence in Private Equity by Julian R. Sterling.The book on Amazon →
One Excel workbook that takes the sharpest warning in the book and measures it. Around it, a blank version for your own review programme, four working documents to print, forty questions that mark themselves, and three cases the book does not work. All free. Nothing is gated behind a sign-up, and no email address is asked for.
Six workbooks, the printable documents and the read-me. Each group below can also be
downloaded on its own. Last revised 22 September 2026.
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Chapter 3 gives this discipline its sharpest warning: never average your way to
comfort. The warning is correct. It is also unquantified — a strange thing for
a warning about arithmetic. This workbook quantifies it: eight domains, twelve managers,
two decision rules.
Three of the twelve carry a flaw the book calls terminal. The averaging model
gives all three its top rating. A manager with no independent custody of client
assets scores 1.500. A manager with no fatal flaw at all — merely ordinary, twos
and threes across the board — scores 2.250.
The model ranks the dangerous one three quarters of a point higher. It
does not merely fail to catch the fatal flaw; it rewards it, because a firm with one
structural gap is usually a firm that has invested in everything else — and
everything else is what the average measures.
With eight domains, one scoring 5, and an approval threshold of 2.00, the average clears
whenever the other seven average 1.571 or better. Not perfection elsewhere
— just good elsewhere.
Now split those eight domains into sixteen to capture more nuance, as programmes regularly
do. The fatal domain's weight falls from 12.5 per cent to 6.2, and the average the
rest must hold to bury it rises to 1.800.
A team that refined its rubric has made it easier to hide a fatal flaw, not
harder. Nobody running that exercise would describe it that way. If the model needs
to be stronger, add veto rules — not domains.
The weights do not matter. The structure does.
Three weighting schemes across the same twelve managers — equal, controls-heavy,
governance-heavy. Rank correlation against equal weighting: 0.979 and 0.993.
Decisions changed: zero out of twelve. Not one recommendation moves.
Now change the model's structure instead — replace pure averaging with veto
rules on custody, conflicts and valuation. Five decisions out of twelve change.
Committee time spent debating weights is time that cannot change an outcome. The design
decision that determines every outcome — whether the model can say this one issue
is disqualifying — is usually taken in a sentence and never revisited.
How far apart can two analysts be?
Chapter 3 asks whether two analysts would draw the materiality line in the same place.
The workbook answers it: for each manager, the distance to the nearest threshold, converted
into analyst-points — single-notch disagreements needed to cross a
boundary.
Four managers sit one point from a different recommendation. Three more sit
two. The median is two analyst-points out of eight domains — which is
to say two analysts disagreeing by one notch on two domains hand the investment committee
different answers on more than half the book.
That is not an argument against scoring. It is an argument for printing the distance to the
threshold beside the score. A rating of 2.10 one point from a boundary and a rating of 1.20
eight points from one are not the same statement about a manager, and a report showing only
the rating has thrown away the more useful half of the information.
The same model, for your own managers
The rating model with the managers and thresholds emptied. Enter your own reviews, one row each; the checks sheet counts what is still missing and tests what must hold in any programme.
Chapter 3 and Appendix E
A blank rating model
Eight domains, the three veto domains of Chapter 3, and twelve empty rows for your managers. Rows without a name are ignored. Set your own thresholds, and the file gives the average, the worst veto domain, both recommendations and how far each manager sits from a different answer. The checks sheet ends on the test the book cares about: no manager with a fatal flaw is approved.
The book’s twelve managers are listed in a text file inside the archive. Type them back in and the file returns three fatal flaws, all three approved by the average and rejected by the veto rules.
Seven pages to print and take into a meeting. A4, with margins wide enough for US Letter.
Appendices A, B and C · Chapters 3 and 14
Four working documents
The request list of Appendix A, seventy documents and questions in ten domains, with received and verified columns. The sixteen red flags of Appendix B, each with why it matters and room for the explanation offered. A rating scorecard that applies the veto rules before the average and records the second reviewer’s view. And the first ninety days of a new analyst, from Appendix C.
A workbook that marks itself. Answer in the yellow cells; the marking fills in as you go.
All parts of the book
Forty questions on the book
Six on the framework and the rating model, six on the firm, the structure and the finance function, seven on custody, audit and compliance, seven on technology, valuation, interviews and the report, seven on Appendix E and seven on the three cases below. Numbers are marked to a tolerance, multiple choice to the letter, and the score sheet counts your errors part by part: that is your revision list.
Nothing is hidden. The marking sheet holds every answer, every tolerance, and the reason for
each answer.
New material, not a restatement. Three situations the chapters name in passing and never take to
a number. Each case is one workbook: the note is the first sheet, the model is the rest, and a
checks sheet closes it. Type your own figures in and every finding recomputes.
Chapters 6, 7 and 10 · Case one
The change of instruction
Two fraudulent change-of-instruction attempts a year on 1.8 million payments. Email checks alone expect to lose 1.08 million a year; a callback written in the procedures but never tested, 0.54; a tested callback, 0.07. Over ten years a loss is near certain without a callback and still a one-in-three chance with a tested one. The policy reads the same in all three: the test is what the analyst asks for.
Chapter 11 and Appendix B · Case two
The marks that come down at year-end
Interim marks run 2, 4 and 6 per cent above true value and the audit corrects them every December. The extra fees are small, about 6 basis points a year. The harm is elsewhere: a secondary buyer paying 95 per cent of the Q3 NAV pays 100.7 per cent of true value. The test is the sign of the corrections, not their size: four negative out of four happens by chance 6.25 per cent of the time.
Chapters 5 and 9 · Case three
The broken deals co-investors do not pay for
A fund spends 3.0 million a year on deals that never close, while co-investors take 30 per cent of every deal that does. Charging all of it to the fund makes its LPs pay 4.5 million of the co-investors’ search costs over the investment period. The analyst’s test is the practice against the policy, deal by deal.
twenty-four controls, each stating its own verdict
Every manager and score is illustrative, as everything in the book is. What is not
illustrative is the arithmetic, which holds for any weighted-average model with a fatal
domain in it. One control tests that a manager with a 5 in a veto domain still reads
“Approve” under averaging — because that is the finding.
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.
What changed, and when
22 Sep 2026
A blank version of the rating model, four working documents on seven pages, forty questions that mark themselves and three new cases. The book’s workbook can now also be downloaded on its own; its content has not changed.
How much should a GP commit to its own fund?Measure own cash, not the headline. A 2 per cent, $15.0m GP commitment shrinks to $3.0m once fee waiver and guaranteed loans are removed: 2.4 months of fees.
How many managers can one ODD analyst cover a year?Size the team on hours, not headcount ratios. 12 new reviews and 60 monitored managers take 2,144 hours: 1.79 analysts, 40.3 managers but 6.7 new reviews each.
Is operational due diligence worth what it costs?On a $50.0m commitment, ODD avoids an expected $180,000 of loss for $46,000 of cost, 3.9 times. On a $10.0m ticket the same review returns only 0.8 times.
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.
Personal Finance for BeginnersWhat a minimum payment really does, and what the snowball and the emergency fund actually cost.
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.
Pricing StrategyA list price of 148.00, a pocket price of 112.51, and the nine deductions in between — with what one point of price is actually worth.
Trade FinanceSix routes to payment on one 4,200,000 export order cost between 178,040 and 223,268, a spread worth 14.8 per cent of the margin, and a day of buyer credit costs 1,031.76.
Cost AccountingOne factory costed twice on the same 13,440,000 of overhead, and 4,053,091 moves between four product families.
Contract ManagementA bid 5.50 a unit cheaper, signed on paper worth 9.81 a unit more — and 94.68 per cent of it was knowable on the day of signature.
Capital MarketsFour defensible readings of one bond, the cost of an issue under each convention, and the placement discount computed at a constant discount.
Financial RegulationThree ratios pass and the fourth is in breach by 1,956.0 million: the output floor, the liquidity buffer after encumbrance, and the loan split.
Bank ManagementFour defensible readings of one balance sheet, the deposit beta measured two ways, and the liquidity that lasts 3.9 days.
The Real Estate WorkoutFour ways out of one broken loan, discounted to today, and the 58.7 cents at which a payoff beats enforcement.
Go beyond the companion files
Operational Due Diligence in Private Equity develops the complete framework behind these models, with the assumptions, trade-offs and worked examples tied together.
These files accompany Operational Due Diligence in Private Equity. The book is on Amazon.
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