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Over the first half of 2011, increased levels of M&A activity occurred within the industrials sector, which we define as companies manufacturing or distributing capital goods, construction, defense, electrical equipment, heavy machinery, and other physical asset categories. In fact, industrials was the most active sector within the AxialMarket network, accounting for 33 percent of activity. […]
Here we go again – the lenders are out in full force, aggressively marketing to borrowers and eager to deploy capital. It wasn’t that long ago when we dreamed that these days would return and now they are upon us. Interestingly, with the advent of unitranche debt and the increasing number of hedge funds and […]
NASDAQ had its all-time peak on March 10, 2000, when it closed at just under 5,050. The market had been on an absolute tear for several months, having risen from 2,732 the prior October. The world had made it through Y2K, the dotcoms were winning everyone’s hearts and minds, and the last hold-out investors were […]
The venture capital industry has changed over the past 5 years in ways that I believe will be lasting rather than temporal change. We are in the process of our own creative destruction with new market entrants and new models of innovation at the precise moment that our industry itself is contracting. When the dust […]
We’ve always been a big proponent of unitranche debt. With senior cash flow debt still difficult to come by, unitranche facilities have proven to be a very attractive alternative financing technique. We’ve been pleased by the larger hold sizes of unitranche providers compared to senior debt providers. Fewer parties in the capital structure often results […]
In 1998, I received a request from the CEO of Putnam Investments to lead an Internet strategy project. Amazon.com had gone public in 1997, and there was a concern within most companies that the Internet would disintermediate their distribution channels similar to what was happening in the book retail industry. From a financial services perspective, […]
The ghost of Emily Litella, as played by Gilda Radner on Saturday Night Live, has emerged to shape the conscience of the SEC. Emily was well-known for delivering aggressive news editorials on subjects where she had clearly “misheard” the topic in her editorial or committed some other malaprop. For example, she ranted “What is all […]
In the last 90 days, M&A professionals researched and marketed 438 opportunities via AxialMarket, comprising $7B in Revenue and over $550M in EBITDA. These members, including super-regional investment banks, boutique M&A advisory firms and M&A consultants, have already delivered 144 opportunities, totaling over $2.8B in Revenue and $305M in EBITDA. In the last 90 days, […]
Two weeks ago, many of us gathered in New York to attend the Symposium on Middle Market and Mezzanine Finance, an annual event where many of the leading providers of junior capital convene to discuss the state of the market. Interestingly, the attendees were rather upbeat. Yes, participants were realistic and conceded that leverage levels had risen dramatically, particularly in the last two months and, for larger middle market transactions, are approaching 5.0x total debt to EBITDA. They also acknowledged that pricing had declined during this same period with mezzanine pricing, even on smaller deals, hovering around 14%, and unitranche pricing declining 100-150 bps.
We’ve seen it before. In fact, every time the financing pendulum swings in one direction or another, the talk starts – “Is mezzanine a dinosaur?” It happened when CLOs emerged and cash flow senior debt providers dipped lower in the capital structure, minimizing the need for mezzanine debt. It happened again when second lien debt entered the middle market and became a competing product. It happened (and continues to happen) when BDCs became a new source of financing and it’s happening once again as unitranche loans gain in popularity and crowd out mezzanine debt. In fact, mezzanine’s demise has been predicted so many times, I hate to bring it up. Yet this time seems a little different because more and more mezzanine funds realize they need to morph into one of two models.
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