Class VI Pathfinder’s Post

Highlights from the Pitchbook US PE Breakdown for Q2-23: - There is a clear relationship between purchase price multiples paid and size, with valuations stepping up to buy scale and stepping down for smaller companies and bolt-on deals. - Exit value surged by 66.9% from last quarter, the best since crashing six quarters ago. This is a much needed boost with funds running out of time to wind down holdings. - Debt for LBOs has dropped off notably in 2023. The average loan-to-value ratio debt has dropped to 43% this year, down from the five-year average of 52%. - Among other deal types, take-privates got smaller this year. More than half of announced deals have clocked in under $1 billion. https://lnkd.in/gKQB6Mpi

If you are thinking of starting #investing and building a #dividends portfolio These companies can be a perfect base to start with: $O 5.54% Yield $KO 3.15% Yield $JNJ 2.96% Yield $PEP 2.87% Yield $HD 2.54% Yield $MCD 2.18% Yield $LOW 1.90% Yield $MSFT 0.81% Yield $V 0.73% Yield $AAPL 0.54% Yield Yield = Yearly dividends amount / the yearly average price per share. #Note: Not investing advice.

In the past few months, we’ve seen a meaningful uptick in talent needs related to increased PE deal flow (PortCo CFOs, CEOs, and M&A leaders). What’s driving this? Here’s what I’m hearing from ECA’s private equity clients: 1. EBITDA MULTIPLES (VALUATIONS) ARE NORMALIZING Lower middle market and middle market EBITDA multiples are slowly coming down as the market corrects itself from the highs seen in 2021/22. As one of my clients put it, “we’re not seeing stupid deals happen like with did after the pandemic.” This creates opportunity. Talk to any savvy investor, and they will tell you that getting the right price is as important as what you do with the portfolio company. 2. STRATEGICS (LARGE CORPORATES) NO LONGER PRESENTING AS MUCH OF A THREAT Starting in Q3 2022, PE deal flow hit a major slowdown, and we suddenly saw large corporate players in the mix on deals where they previously wouldn’t have been in the hunt. They were flush with cash from record profit years, and looking to spend. As those same companies experience a more challenging economic environment in 2023, they are backing away from the table and posing less of a competitive threat on LMM and MM deals. 3. PE IS FEELING MORE COMFORTABLE ABOUT THE LENDING ENVIRONMENT Despite what Fitch is reporting about the US economy, the general sentiment is interest rates have likely topped out, and there is a path (albeit a long one) to lower rates. This is an important component transactions, and a critical source of leverage for PE. If we learned anything from 2008, maybe we should be better that Fitch has downgraded the US… 4. ACTIVITY IS HEATING UP, BUT IT’S NOT A FRENZY SEEN POST COVID There are great deals out there, and the best PE firms are getting aggressive again. You’ll hear a lot about “record levels of dry powder”…yes dry powder is near historical highS, but the vintage of the majority of those funds allows PE investors to be patient. They’ve got some time on their side and they’re going to continue making smart bets. 5. WHAT ARE YOU SEEING?

Growth equity deal flow defies slowdown in PE dealmaking (via PitchBook Data): https://ow.ly/8URo50PviCG #privateequity #funds #pitchbook

#Optimal #Investment and #Financing #Decisions Under #Cost #Uncertainty A #review article written by I Shin Wu #Abstract In this paper, we employ the real options approach to study the impact of cost uncertainty on a firm’s optimal #investment and #financing decisions. The firm owns a perpetual right to an #irreversible investment project, and the firm’s goal is to determine the optimal investment timing and level of coupon #payments when the investment cost jumps upward at a random time. We find that the optimal investment threshold and level of coupon payments decrease with the jump #intensity and the #magnitude of the jump. The cost uncertainty gives the firm a stronger #incentive to accept projects with risky #cashflows. Furthermore, we examine the #conflict of interests between the share- and bond-holders. We show that the debt overhang #distortion and the asset substitution incentive decrease with the cost uncertainty. However, the effect of cost uncertainty on the incentive of #asset substitution reverses in the region of low operating #profits. For more details you can visit our #website.... https://lnkd.in/djREbPSz We do accept #PPTs and #Video Articles to be publish within our Journal. You can send us your article to given email #Email: [email protected]

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Using data from PitchBook's Q3 2023 Global M&A Report, here are three charts to explain the decade-low point in M&A quarterly deal value.📉 Quick takeaways: 1. Buyers have pulled back M&A spending by 20% from Q2 to Q3, the lowest quarterly total in over a decade. 2. Financial sponsors' share of M&A dealmaking activity continues to shrink. 3. Recent valuations in financial services have plummeted while energy deal multiples appreciated. Feel free to drop me a message for the full report. 🗞 #PitchBook #mergersandacquisitions

Let's grow together with our Placement Advisory Services. Get above market rates for your investments 🌱📈 #Growingtogether #PlacementAdvisoryservices #Bidbonds #Performancebonds #GuaranteesforAdvancepayments #Tradefinanceexperts