Executive Summary Valuations Heightened The simple average Enterprise Value (EV) to EBITDA multiple of 7.4x for Q1 2020 was marginally higher than the previous four quarters. This was the net result of a shift in sentiment considering size and industry factors. Size Premium Size became an even greater pricing consideration for the middle market as…

Executive Summary The Issue: Companies are facing cash shortfalls as they struggle to reopen from the COVID-19 lockdown.  Companies facing short-term liquidity challenges can seek new cash sources, such as the government’s Payroll Protection Program “PPP” or a bank line-of-credit.  However, certain companies may never achieve the revenue and profitability necessary to remain viable as…

In financial markets, infrequent or rare events are referred to as “Black Swan” events.  The term “Black Swan” was popularized by Nassim Nicholas Taleb in his 2007 book, The Black Swan:  The Impact of the Highly Improbable.  Taleb describes Black Swan events as possessing three key attributes: Extremely rare Severe impact Obvious in hindsight Such…

Can Leveraged Debt Retest Low Premiums? This article continues the discussion started in Article #1, “Is It Time to Invest in Leveraged Debt?” and  Article #2, “Leveraged Debt Investment Alternatives.”  Article #3 addresses the question of whether or not the leveraged debt market has reached its cyclical peak and if credit risk premiums can narrow…

Leveraged Debt Investment Alternatives Leveraged Debt Outlook Vol 2 This article continues the discussion started in Article #1, “Is It Time to Invest in Leveraged Debt?” and  describes the primary debt types that trade in the leveraged debt markets What is leveraged debt? Leveraged debt is the financial obligations of large businesses and certain governments…

Is it Time to Invest in Leveraged Debt? In the week ended January 11, 2018, retail investors poured $2.65 billion into the high yield bond market.  Was this a good idea? The chart below describes the historical yield experience investors have enjoyed (sometimes endured)  through their investments in leveraged debt. Leveraged debt includes all below…

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