What does 'underwrite a deal' mean?

Hi, everyone. I want to know what does 'underwrite a deal' actually mean? What's the procedure. For example, a PE analyst will responsibile for underwriting deals. What's the detailed tasks?

2 Comments
 

It basically means you're diligencing and analyzing a deal and the risk and liability related to said deal as a result.

"Underwriting is the process of accepting liability when an investment is made and guaranteeing payment in the event of loss or damage. Underwriting is not exclusive to any particular industry and can be used for any type of loan, investment, or insurance. Underwriting originated from a practice where investors would leave a signature under the amount of risk they were willing to take on in a given deal. While the process is much more formal now, the name underwriting is still associated with this type of risk evaluation."

 

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