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Judgment & ambiguity · When to act

A PE portfolio company is drifting toward a leverage-covenant test it will likely trip next quarter on the current trajectory, but the CFO insists a large receivable will close in time. When do you get ahead of the lender versus wait on the CFO's forecast?

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I act before the breach, not after, because a lender you go to voluntarily with a plan is a different conversation than one who catches you tripping a covenant.

The full answer: structure, worked example, likely follow-up.

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