Commentary

Covenantive Easing (First of a Series)

Much attention was paid over the past few weeks to a dramatic series highlighting the struggle between two powerful forces, a dizzying game for world domination, with the outcome hanging in the balance and viewers on the edge of their seats. Of course we’re talking about our recent series on valuations (“Why Valuations Matter” [link]).

Emotional Support Loans

A beluga whale was found last week in the Arctic Ocean off the northern Norwegian coast. Otherwise not an unusual event, but this particular cetacean wore a harness. Its proximity to Russia sparked rumors the animal had been recruited as a spy. Another theory, however, soon surfaced. Some surmised “Hvaldimir” was an escapee from a

Why Valuations Matter (Last of a Series)

“There are two times in your life when you shouldn’t speculate: when you can’t afford to, and when you can.” – Mark Twain Intergrowth 2019 this week in Orlando came at a propitious time, at least as far as our lender survey on valuations goes. One long-time NYC-based middle market practitioner weighed in with a

Why Valuations Matter (Fifth of a Series)

“Only those who will risk going too far can possibly find out how far one can go.” –T.S. Eliot So far in our special series on valuations we’ve reviewed key variables that impact equity valuations, and the strategies private equity has used to address them. We’ve also shared sponsors’ perspectives on challenges of higher purchase

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

Why Valuations Matter (Third of a Series)

“The value of a thing sometimes lies not in what one attains with it, but in what one pays for it – what it costs us.” – Friedrich Nietzsche In last week’s installment of our continuing special series, we discussed how critical time is to driving value. This week we take a deeper look at

Why Valuations Matter (Second of a Series)

“Time is the longest distance between two places.” – Tennessee Williams One of the most important variables impacting valuations is how much time sponsors have to effect strategies to improve company performance. According to Preqin, the hold period for private equity GPs worldwide was 4.5 years last year – down from 5.9 in 2014. The

Why Valuations Matter (First of a Series)

“Anything that just costs money is cheap.” – John Steinbeck At the PartnerConnect conference in Boston last week, three panelists (including your correspondent) held forth on trends in middle market sponsor finance. One audience question caught our attention: “Given the current market, does the level of valuations concern you?” Of course, it depends what side

Roses are Red, Covenants are Few

There comes a time when traditional means of communication fail. When other tools must be employed. According to Tuesday’s WSJ, graduates at the University of Glasgow are using haiku to summarize their complex planetary and lunar projects. These 17-syllable science-related poems, nicknamed “sciku,” make extremely technical topics “more accessible.” Given today’s challenging interplay of elements

Leveraged Loans and Systemic Risk (Last of a Series)

If nothing else, the history of leveraged lending since the credit crisis shows both regulators and regulated entities have worked to shift loans off bank balance sheets. The object of Leveraged Lending Guidance, in turn, was not to eliminate credit risk, but limit the most aggressive bank lending practices – for example, leverage over six times