With the Fed's recent decision to raise interest rates and increased pricing in the institutional market, pricing for middle-market deals increased slightly in the fourth quarter. As the latest issue of Transaction Trends discusses, liquidity is expected to remain high and potentially increase as firms—both balance sheet lenders and funding vehicles—reset their budgets and asset management goals for 2016.
Despite a decline in overall market activity, leverage in the fourth quarter remained at historically high levels. On a TTM basis, there's been a higher frequency of senior/subordinated transactions relative to senior-only transactions, which has likely been driven by continued upward pressure on purchase multiples.
Meanwhile, as outsourcing has deeply penetrated every major industry vertical in the U.S. economy, deal flow in this segment of the market has picked up steam. Service and healthcare firms have been the most active, with industrial and food companies also attracting attention.
To find out what's behind these and other data points in middle-market deals, download the full issue of Transaction Trends.
Want to learn more about what's behind these and other developments? Contact Stephen R. Isaacs, BMO Harris Bank Managing Director—Group Head, Sponsor Finance, at +1 (312) 461-6236 or firstname.lastname@example.org.
To sign up for current industry, economic, and business strategy content, visit our subscription center at bmoharris.com/subscribe.
This article represents the views of the author only and does not necessarily represent the views of PitchBook.