Don’t Piss Off A Mid-Market Lender

I moderated a debt markets panel during last week’s Buyouts Texas, and was struck by a comment from Devon Russell, a senior managing director from Madison Capital Funding. He said that while mid-market lenders are slowly increasing their deal volume, they also are shutting out certain equity sponsors who have exhibited bad behavior over the past year.

Russell was specifically referring to situation where “everyone knows it’s over,” but the private equity firm nonetheless “stands in the [lenders’] way.” All of the other panelists bobbed their heads in agreement.

A bit of a reversal from two years ago, when certain private equity firms were trying to cancel deals they had already agreed to (Sallie Mae, United Rentals, etc.). At the time, I asked a conference panelist – Mark Bradley of Morgan Stanley – if banks would abstain from doing business with such reneging sponsors. His reply: “They might be upset for a while, but it won’t last too long. Bankers are coin-operated.”

Maybe just the difference between the mega-market and middle-market? Or perhaps just not enough time has passed…