Deal Benchmarking: Evaluate every new deal against your firm’s position.
Deal Benchmarking checks every new deal against your firm’s acceptance criteria and past deals, showing whether it fits, where it differs and what is missing.
Deal Benchmarking checks each incoming deal against your firm’s acceptance criteria and past deal history. It shows your team whether a deal fits, where its terms differ, and what information is missing.
CredCore automates deal benchmarking.
Product designers used to check every new screen manually to confirm it worked on mobile, in portrait and landscape modes, met accessibility standards, and had sufficient contrast. They now use AI for that checklist and focus on the design work. Credit teams have similarly evaluated new deals manually against a checklist, reviewing one deal at a time.
Evaluating Every New Deal
A new deal usually arrives as a summary covering the sector, EBITDA, opening leverage, tenor, amortisation, call protection, and proposed add-backs. Before taking a deal further, an analyst needs to answer two questions: whether the deal meets the firm’s acceptance criteria, and how it compares with the firm’s past deals.
To answer the first question, the analyst checks the deal’s terms against the firm’s requirements, for example, comparing an EBITDA of $42 million against a $50 million minimum, leverage of 5.5 times against a 4.5 times ceiling, and call protection of 1% for one year against a requirement of 2% for three years. To answer the second question, the analyst searches the firm’s past deals for comparable transactions and manually compares the terms. This takes time and has to be repeated for every incoming deal.
A firm’s acceptance criteria also change over time. When those criteria are kept in separate spreadsheets, analysts can end up working from outdated versions. As a result, two analysts reviewing the same deal can reach different conclusions without either of them making an error.
How Deal Benchmarking Works
Deal Benchmarking keeps a firm’s acceptance criteria and deal history in one place and runs both comparisons automatically. When a new deal comes in, the system checks each term against the firm’s criteria and past deals, marking each one as in line, tighter, or looser against both benchmarks.
CredCore builds the historical benchmark solely from the firm’s own past deals on the platform, so new deals are measured against terms the firm has previously accepted rather than external market data. If a term is missing from the deal summary, Deal Benchmarking flags it. Those missing items form a list of questions to send to the borrower before continuing the review.
This produces a clear summary for each new deal showing whether it fits, where it differs from the firm’s criteria and history, and what information is still needed. The team can then focus on suitable deals and decline the rest with the reasons already recorded.
Using Your Criteria and Deal History
A firm can set up multiple benchmarks, such as one for software deals, one for another sector, and a general benchmark across all funds, and select the relevant benchmark for each new deal. Benchmarks are updated on the firm’s own schedule, typically quarterly or half-yearly. This ensures that every deal reviewed during a given period is measured against the same criteria and that the whole team works from the same updates at the same time.
Because this routine comparison is completed automatically when the deal arrives, the team can spend its time on the deals worth pursuing.