PitchBook November 03, 2016
The heart of the middle market is made up of medium-sized companies that are growing and looking toward an eventual IPO or sale to a strategic buyer. They are the engine of growth that drives our economy. The middle market is one of the most dynamic areas of the economy and continues to experience a number of transformations. One of those has been the decline of middle-market companies going public and instead opting to tap the private markets for liquidity and to fund their growth. This steady need for funding has only grown by these small and medium-sized companies that comprise the middle market and their PE sponsors. From traditional manufacturing and healthcare companies to high-tech companies increasingly accessing capital in traditional middle-market form, these companies seek capital to scale and reach the critical mass needed to be acquired by a strategic or achieve an IPO.
Having operated within the middle market as a lender for the past 15 years, Madison Capital Funding offers an experienced perspective on current trends in lending to middle-market companies, further informed by its unique relationship with New York Life. “The large-cap market can come and go, volumes can wane back and forth with economic cycles pretty dramatically,” said Hugh Wade, CEO of Madison Capital. “Whereas our market is steady, it’s high yielding, it’s predictable.” Christopher Taylor, Managing Director and Head of Relationship Management at Madison Capital, adds: “The number of lenders that serve lower-middle-market private equity sponsors has grown tremendously. It’s become a much more efficient, more competitive marketplace. This has been very good for us, but requires us to be constantly rethinking how we do business, how we approach our sponsors and how we attack the market.”
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