(Charlotte, NC – February 19, 2019)
US PE Middle Market Activity
Source: PitchBook Data
*Estimated as of December 31, 2018
What We’re Reading
Below are links to recent articles we found interesting (no partnerships expressed or implied).
(WSJ) At the end of 2018, roughly 27% of first-lien loans were backed by companies that didn’t have junior debt outstanding. This is the largest share on record since 2007 – the height of the last economic expansion. Many analysts anticipate these shrinking debt cushions will lead to lower loan recovery rates during the next economic downturn.
(Los Angeles Times) Today there is about $1.15 Trillion in outstanding U.S leveraged loans – a record that is double the level of five years ago. Furthermore, these loans are increasingly being made with less protection for lenders and investors. If an economic downturn arises and firms begin to default on these risky loans, the effects could reverberate throughout the economy similar to how the credit bubble burst sent the U.S into a deep recession in 2009.
(Pitchbook) Historic fundraising levels by Private Equity firms nationwide are beginning to have unforeseen effects on the industry. While capital calls have not slowed down and concerns about dry powder becoming stale may be overrated, pressure is being put on fund managers to deploy capital that could lead them to execute investments they might have otherwise passed on.
(HBR) While strategizing for the future, executives at IKEA began to wonder how their business model should evolve to maintain success in the marketplace. In order to help answer this question, they hired a team of neuroscientists who tested IKEA customers in Europe and correlated their brain’s reactions with a behavioral database to pinpoint which business models the customer were likely to accept.
(MIT) Robert Pozen is a very productive person: an MIT Sloan senior lecturer, he served as the former President of Fidelity Investments, Executive Chairman of MFS Investment Management, and as an Associate General Counsel of the U.S Securities and Exchange Commission. He divulges some of his productivity tips that everyone can incorporate into their daily routine.
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