Despite sluggish deal activity and market volatility, leverage levels in middle-market transactions remained historically high in the first quarter. As the latest issue of BMO Harris Bank's Transaction Trends examines, higher credit quality companies have attracted the bulk of the attention, driving leverage levels higher.
With increasing interest rates, concerns about the global economic outlook and general market conditions, deal prices jumped significantly. Also, purchase price multiples remained at elevated levels, with the best assets being chased by multiple bidders, while high enterprise values have kept equity checks at healthy levels.
Meanwhile, both private equity sponsors and lenders have exhibited a high level of interest in multisite investments, given these companies' inherent geographic diversity, high level of recurring revenue and consistent financial performance. Many multisite businesses are found in the healthcare and consumer sectors; these models are highly leverageable given the attractive credit characteristics of these types of transactions.
To find out what's behind these and other data points in middle-market deals, download the full issue of Transaction Trends. You can also contact Stephen R. Isaacs, BMO Harris Bank Managing Director-Group Head, Sponsor Finance, at +1 (312) 461-6236 or firstname.lastname@example.org.
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