An integrated suite of private credit due diligence, valuation and advisory services supporting underwriting, deal execution and ongoing private credit portfolio management across the private credit lifecycle with a focus on validating assumptions, cash flows and structures before and after capital is deployed.
The Private Credit Market Has Changed. So Have the Stakes.
Private credit has become one of the defining forces in middle-market finance. As banks have pulled back from direct lending, private credit funds, business development companies (BDCs) and alternative asset managers have filled the gap — and the market has grown rapidly in both volume and complexity. Loan structures are more intricate. Covenant-lite deals have reduced early warning signals. And portfolio monitoring has become a critical function in its own right. The firms that navigate this environment effectively are those with disciplined private credit underwriting, rigorous monitoring and oversight and advisors who understand how private credit transactions are structured and where they tend to go wrong.
Who We Work With
PKF O’Connor Davies works with private credit managers, direct lenders and allocator platforms at every stage of the deal and portfolio lifecycle:
- Private credit funds and direct lending platforms
- Business development companies (BDCs)
- Special purpose credit vehicles and structured credit managers
- Family offices and institutional investors deploying private credit strategies
- Distressed debt and special situations investors
Private Credit Due Diligence, Valuation and Advisory Services
Our work spans the full arc of a private credit investment. Each engagement is led by senior professionals with direct experience in credit markets, structured finance and private credit accounting and operations.
Meet Our Professionals
Helen Rexwinkel
Michael Hayes
Elisabeth da Silva
Kimberley A. Train
Michael Stellwagen
Christopher A. Johnson
Michael Curtiss
How We’re Different
What Differentiates Our Approach to Private Credit
- Deep experience across credit, valuation and operational diligence – providing holistic solutions, not siloed capabilities
- Integration of borrower diligence, collateral validation and cash flow analysis in a single workstream
- Ability to perform substantive testing and independent verification, not just high-level review
- Direct experience with BDCs, direct lenders and complex credit structures
- Focus on identifying where deals break, not just documenting what’s presented
What Private Credit Lenders and Allocators Need From an Advisor
Private credit due diligence is not a generic financial services capability. The most common points of failure are not in deal sourcing or pricing — they surface in three areas: incomplete borrower diligence, collateral and structural risk that is underappreciated at underwriting and inadequate ongoing monitoring where early warning signals exist in the data are not systematically tracked. Our services are organized to address each of these risk points directly, from initial underwriting through portfolio management and, when needed, special situations support.
Borrower Diligence (Operational Due Diligence for Private Credit)
Assessing integrity, governance and control environments
When engaged: Pre-transaction, as part of underwriting — particularly where enhanced visibility is required around borrower integrity, governance, ownership and controls.
- Ownership and internal governance validation
- Background investigations of key individuals and entities
- Regulatory and sanctions screening
- Risk and control environment assessment
- Financial and treasury controls testing
Collateral Diligence for Private Credit Transactions
Validating existence, ownership, structure, cash flows and enforceability
When engaged: During underwriting of structured, asset-based or complex transactions.
- Independent counterparty and obligor confirmations
- Payment flow and control account analysis
- Review of account structures and fund controls
- Testing of payment waterfalls and priority of payments
- Assessment of banking and transaction counterparties
Substantive Testing and Underwriting Validation
Independent verification of key underwriting assumptions
When engaged: During underwriting, where independent validation of borrower-reported data, cash flows and key assumptions is required to support credit decisions.
- Testing of revenue reporting against underlying source data and transaction records
- Cash flow validation through bank statement analysis and funds tracing
- Review of contract terms, pricing mechanics and adherence to key commercial provisions
- Data integrity and system-level testing to assess reliability of borrower-generated information
- End-to-end fund flow analysis to confirm consistency between reported activity and actual cash movement
- Independent counterparty confirmations to validate balances, exposures and key relationships
Ongoing Portfolio Monitoring for Private Credit
Maintaining visibility and identifying early warning signals
When engaged: Post-investment, as part of ongoing portfolio oversight.
- Cash flow generation versus reported earnings analysis
- Monitoring of payment waterfalls and debt service priority
- Review of treasury structures and account controls
- Analysis of intercompany activity and potential leakage
Credit-Focused Valuation Services
Understanding value through a credit lens
When engaged: At underwriting, periodically across the portfolio and in stressed or complex situations.
- Enterprise and asset valuation
- Credit-focused valuation and coverage analysis
- Valuation of illiquid and complex assets
- Stressed scenario and downside valuation
Turnaround and Special Situations Advisory
Stabilizing performance and preserving value
When engaged: Covenant pressure, liquidity constraints, restructurings or special situations.
- Liquidity management and stabilization
- Business plan validation
- Restructuring and refinancing support
- Transaction and stakeholder advisory
- Pre- and post-deal analysis and integration
Forensic Accounting and Investigation Services
Investigating risk when something doesn’t add up
When engaged: Red flags, disputes or unexpected performance issues.
- Fraud and misconduct investigations, including litigation support
- Forensic accounting and financial reconstruction
- Cash tracing and transaction analysis
- Data-driven anomaly detection
Typical Engagement Scenarios
- Underwriting a new platform or add-on investment requiring enhanced borrower diligence
- Validating cash flow generation and repayment capacity in asset-based or structured transactions
- Independent review of portfolio company performance where results diverge from underwriting
- Pre-investment diligence for allocators investing in private credit managers
- Support in stressed or underperforming credits requiring deeper analysis
Work With Our Private Credit Team for Coverage Across the Private Credit Lifecycle
Whether you are underwriting a new transaction, conducting private credit due diligence, monitoring loan or portfolio performance or navigating a complex credit situation, our team delivers comprehensive borrower and collateral diligence, independent valuation and ongoing counterparty monitoring. We also provide specialized support in turnaround advisory and forensic services, giving you the insight needed to move with confidence in underwriting and across the life of the investment. Contact us today to get started.
FAQs
What is private credit due diligence?
Private credit due diligence involves evaluating borrower operations, collateral structures and financial performance to assess credit risk prior to investment. It typically includes operational due diligence on the borrower, validation of collateral and payment structures and credit-focused valuation.
What is the difference between borrower diligence and collateral diligence?
Borrower diligence focuses on the people, governance and control environment behind a credit — assessing management integrity, ownership structure and operational controls. Collateral diligence focuses on the assets and structures securing the loan like validating payment waterfalls, account controls and the enforceability of the collateral arrangement.
What types of private credit lenders, direct lenders and investors does PKF O’Connor Davies work with?
We work with private credit funds, direct lending platforms, business development companies (BDCs), structured credit managers, family offices deploying credit strategies and distressed debt investors.
How does ongoing private credit portfolio monitoring work?
Ongoing private credit portfolio monitoring involves systematic review of a borrower’s financial performance relative to original underwriting assumptions — tracking cash flow generation, debt service coverage, treasury controls and intercompany activity to identify early warning signals before they become material issues.
When do you get involved in turnaround or special situations?
We are typically engaged when a borrower is experiencing covenant pressure, liquidity constraints or performance deterioration — or when a lender needs independent support to evaluate restructuring options, validate a business plan or manage a complex stakeholder situation.