Deal level metrics enable LPs to evaluate how a manager is adding value to the underlying companies within a fund. Metrics can also be used to help LPs understand the risk associated with an investment, the overall health of the investment and benchmark the investment to the broader markets (in terms of valuation, performance, risk, etc.).

Through understanding exactly what these metrics are measuring, LPs can get an understanding of where GPs are driving value and how this compares to other GPs.

Deal Level Metrics: The Basics

The most common deal level metrics, and their respective definitions, are as follows:

Acquisition vs. Current / Exit

When evaluating deal level metrics, LPs are often looking to understand the financial health of a portfolio and see how a GP has created value over time. To best capture this, the metrics are displayed at acquisition and at current/exit. As the name indicates, acquisition metrics are as of the date that the GP purchased the company. Similarly, current/exit metrics are either as of the most recent valuation date or the valuation at the time that the GP sold the company.

Using Deal Level Metrics

LPs can benchmark their portfolio’s deal level metrics against benchmarks such as Cobalt LP’s deal level benchmark. This dataset, created by Hamilton Lane, provides information on over 50,000 portfolio companies, which represents over $3.25 trillion in total invested capital. This data allows LPs to see the aforementioned metrics at both acquisition and current/exit.

Additionally, LPs can leverage the Cobalt LP platform to dynamically run aggregated market analysis by sector, geography, asset class or market segment.

To learn more about how Cobalt LP can add to your team, contact us.