Throughout 2018 the debt markets remained historically aggressive in terms of pricing, leverage and covenant flexibility. There has been a surge in non-bank direct lending in the middle market.
Currently, there is over $300 billion in dry powder at private credit funds. With so much capital waiting to be deployed and lenders eager for deals, more borrowers have better options.
Despite aggressive conditions in the overall market, we are starting to see indications that some lenders are taking a more cautious approach to start 2019.
Bridgepoint expects debt markets to gradually pull back and tighten towards the end of 2019, driven by macro fears and the continued rising interest rate environment. We advise company owners to act now on these record historical markets to appropriately capitalize and strengthen their balance sheets.
Leveraged Finance Options / Scenarios
- Dividend Recapitalization
Sizable cash dividend to the owner(s)while maintaining 100% ownership of the Company
- Flexible / Reduce Debt Service
With low amortization (20-100 year) / required debt service, institutional debt enables higher flexibility and investment into growth and/or buyout of select shareholders
- Acquisition / Growth Financing
Capital to allow the owner(s) of the company to pursue aggressive growth initiatives and/or buyout of select shareholders
- Committed Captial Partner
Partner to provide strategic guidance, purchasing power and additional capital for growth, including acquisitions, or liquidity