Why Valuations Matter (Fourth of a Series)

“Doubt is not a pleasant condition, but certainty is absurd.” –Voltaire

The story of value is the story of private equity. How these firms have grown businesses and sold them for superior shareholder returns is about value creation. The paths to creating value and achieving these returns differ for each sponsor.

As we discussed last week, one of the key strategies for better valuations, in the current environment of high purchase price multiples, is the “buy-and-build.” Incremental add-ons at lower multiples help reduce the effective multiple at exit...

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Quote of the Week

“I don’t think inflation is running away from us.” – Robert Kaplan, president, Federal Reserve Bank of Dallas.

Featuring Charts

Chart of the Week: Buy-and-Building

April 22, 2019

Since the credit crisis private equity sponsors have quickened the pace and number of add-on acquisitions.

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Chart of the Week: Shift to the Right

April 15, 2019

The number of buyouts with purchase price multiples over 10x has increased markedly since 2013.

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Chart of the Week: Lofty Pursuits

April 9, 2019

Purchase price multiples eased last year, though still sustained at near record levels.

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Chart of the Week: Upping the Ante

April 4, 2019

The cost of buying companies has risen for private equity sponsors as a multiple of ebitda since the credit crisis.

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Chart of the Week: Leverage Redux

March 28, 2019

After peaking in 2017 at close to 50%, equity share of capital in the middle market has declined to less than 35%.

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Chart of the Week: Bank Shot

March 20, 2019

Mergers, consolidations, and regulation all share responsibility for the flight of leveraged loans to the non-bank sector.

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Features

The Pulse of Private Equity – 4/22/2019

Core MM had a big 2018 Download PitchBook’s Report here. The US middle market went gangbusters last year, setting records in both volume and dollars. Two of the three segments of the middle market, however, inched down YoY....

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Private Debt Intelligence – 4/22/2019

Private Debt Investors Remain Cautious During Q1 2019, private debt investors issued 249 fund searches and mandates for investments they are targeting in the coming 12 months. Perhaps due to their concern about the prospect of an equity market downturn, it seems that institutions are taking a generally cautious attitude to the asset class....

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The Pulse of Private Equity – 4/15/2019

Buyout multiples: Steady as they go Coming soon Download PitchBook’s Report here. Despite nine interest rate hikes since December 2015, buyout multiples have remained remarkably steady. The four-quarter rolling median, which helps smooth out that trend over time, has increased by a single turn since early 2016...

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Leveraged Loan Insight & Analysis – 4/15/2019

Historical Data – US: ABL Volume & Deal Count Almost US$24bn in asset based loan volume was completed via retail syndication in the US in 1Q19, a 29% increase over the year ago period, but down nearly 26% from the record quarterly high garnered in 4Q18....

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Private Debt Intelligence – 4/15/2019

Private Debt Funds in Market The private debt fundraising marketplace is becoming increasingly crowded: as of the start of April 2019, there are 407 vehicles seeking a total of $182bn from investors. These figures have continued to increase from the 395 funds seeking $168bn at the start of the year to reach a new record

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State of the Capital Markets – First Quarter 2019 Review and Second Quarter 2019 Outlook

April 11, 2019

Review of Current Market Conditions/ Analysis of Capital Markets Metrics/ Review of Credit Quality/ Outlook for Second Quarter 2019

Special Report: Spotlight on Healthcare

February 28, 2019

Beginning in March 2018 The Lead Left published a series of articles on the healthcare industry. This report consolidates those articles.

Special Report: Loans – Search and Recovery

February 14, 2019

Beginning in October 2018 The Lead Left published a series of articles on loan recovery. This report consolidates those articles.