Buy-side due diligence on a specialty-finance lender to the debt-settlement industry

The challenge

A special-situations credit fund with >$100B AUM needed to evaluate an investment in a specialty-finance provider that supplies capital to U.S. debt-settlement companies, and to test whether the target's five largest counterparties — roughly 80% of its deployment — could sustain $85M–$100M of monthly originations through 2026 while holding underwriting quality above a 500 FICO floor.

The solution

• Reviewed the target's confidential information memorandum and the sponsor's prior management interviews, then built top-down and bottom-up models sizing the U.S. debt-settlement market against a >$1T unsecured consumer-debt base and the addressable enrolled-debt pool
• Structured the counterparty diligence — an interview guide and case studies on the five key accounts (~80% of the target's deployment) — to test deployment feasibility, capital quality (>500 FICO), and the risk of counterparties switching to rival capital providers
• Assessed the competitive set of rival capital providers and the regulatory outlook, and synthesized company data, secondary research, and expert interviews into an investment-committee-ready diligence report

The impact

• U.S. debt-settlement market sized top-down and bottom-up off a >$1T unsecured consumer-debt base
• Five key counterparties (~80% of deployment) tested against an $85M–$100M monthly, 2026 deployment thesis
• Delivered investment-committee-ready commercial due diligence on the target's growth, capital-quality, and competitive-moat thesis to inform the fund's investment decision