Fit to Be Funded—Who’s Attracting Capital Right Now

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Private debt and equity groups continue to raise new funds and compete aggressively to find deals. At the same time, concern about a potential turn in the market is leading to the highest level of selectivity—in terms of focus on particular industries and types of businesses—that we have ever seen. Our recent closes and current mandates reflect where the interest is today—health and wellness, eCommerce, software-as-a-service (SaaS) and education.

Our client, Advice Media, created a SaaS solution for medical professionals, checking all of the boxes for the discerning investor: recurring revenue, healthcare focus and proprietary technology. Another current client sells home wellness products direct-to-consumer at a fraction of the price of store brands. On trend, Intrepid Q3’19 Capital Markets report will shine a spotlight on the explosion of tech-enabled home fitness businesses (Peloton, anyone?).

Key Q3’19 market updates:

  • The Federal Reserve lowered its target Fed funds rate, allowing quality companies to improve financing terms.
  • Middle market credit spreads tightened as investors compete to invest into higher-quality opportunities and business
    owners have grown to expect lower priced loans.
  • Selectivity is leading to fewer deals—middle-market leveraged loan activity is pacing to decrease 20% to 30% in 2019 relative
    to last year.
  • While private equity (PE) purchase price multiples remain elevated, middle-market investors have begun to show discipline
    by limiting leverage to under 50% of enterprise value.

Intrepid’s Capital Markets team partners with entrepreneurs and financial sponsors to achieve their goals while maintaining close connections with potential investors across the capital structure to facilitate the best possible financial and strategic partnerships for our clients. Feel free to reach out to us regarding any potential capital raising opportunities or questions you may have about the current state of private debt and equity markets.