Glasses Half Full (First of a Series)

Our friends at Lincoln International produce a superb report on private market insights from their valuations and opinions group. Derived from their database of hundreds of borrowers as part of their quarterly analyses for managers’ portfolio valuations, this data provides helpful guidance on a host of issues such as loan prices, purchase price multiples, and financing terms.

Of particular interest is the revenue and Ebitda performances of these largely privately held, middle market companies, quarter by quarter. Economists, market analysts, credit managers and investors are understandably keen for signs of any deterioration as a result of higher interest rates, inflation-related costs, and/or a general economic slowdown.

As our Chart of the Week highlights, over 80% of Lincoln’s portfolio companies demonstrated higher sales last year than 2021. Less than that, about two-thirds, reported improved cash flows. This has been interpreted as evidence businesses are being challenged by mounting expenses, including interest and wage pressures.