Commentary

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

Leveraged Loans and Systemic Risk (Second of a Series)

According to a Harvard study, middle-aged men who did 40 pushups have a 96% lower risk of cardiovascular disease than those who did 10 or fewer. Not since eighth grade gym class has anyone ordered us to “drop and give me twenty.” But surely in all those formative years we comfortably amassed 40 pushups. To

Leveraged Loans and Systemic Risk (First of a Series)

“It is difficult for us to envision a scenario in which the leveraged loan market causes the next financial crisis.” – Beth MacLean, loan portfolio manager, PIMCO. We aren’t often torn between which notable Quotes of the Week to feature. This issue, however, presented us with outstanding insights from two long-time credit practitioners. Let’s go

Apart at Last

Valentine’s Day traditionally celebrates the marvels and mysteries of love. As a study of the latter, a travel site ran an article last week about a couple separating after almost a century together. Born in 1897, Bibi and Poldi had been in a committed relationship since the 1920’s. However, for reasons that have escaped their

It’s the Dough, Not the Dow

The oft-quoted baseball legend Yogi Berra once said, “When you come to a fork in the road, take it.” This has been cited as perfectly capturing the futility of some decisions under challenging circumstances. Turns out there was a bit more behind the quote than the Yankee catcher’s famously offbeat wisdom. According to a 2009

That’s Why It’s Called a 'Market'

F. Scott Fitzgerald wrote, “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.” For observers of the capital markets, this quote is especially apt. Today’s cross-currents are bewildering. Unemployment is up, yet the number of people finding