Increasing turbulence favors our balanced approach.
Over the last few months, we have seen middle-market M&A and corresponding debt capital markets shift away from an almost universally favorable seller’s market to a new era that has decisively more nuance.
Today’s market appears to be settling on an interesting division. Quality assets — growing companies with healthy balance sheets — continue to generate eye-popping multiples supported by abundant and cheap debt capital. However, mediocre or underperforming assets — companies with stagnant growth and challenged balance sheets — struggle to find buyers or debt investors at levels anywhere near what could have been fetched less than a year ago.
We’ve seen this dichotomy play out directly with our clients. In just the last few months, we have led two bankruptcy auctions, while simultaneously selling two healthcare companies for double-digit EBITDA multiples.