Increased Leverage Lifting Middle Market Price Tags

image 1By Wesley Legg, Chief Operating Officer

The median debt percentage for middle-market deals continues to rise.  Lenders are loosening their purse strings, as the market continues to recover and loan default rates remain low versus historical standards. This is one of the dynamics pushing middle-market valuations higher and making for a seller’s market in most industries.  Determining how long this trend will last is a bit of guessing game.  I won’t attempt to predict when interest rates will rise and/or the economy will sputter, but I’ll take the high-odds bet that the when that happens the chart below will stop moving up and to the right, as will valuations.

Founders Investment Banking (Founders) is a merger, acquisition & strategic advisory firm serving middle-market companies. Founders’ focus is on oil and gas, industrials, software, internet, digital media and healthcare companies located nationwide, as well as companies based in the Southeast across a variety of industries. Founders’ skilled professionals, proven expertise and process-based solutions help companies access growth capital, make acquisitions, and/or prepare for and execute liquidity events to achieve specific financial goals. In order to assist Founders Investment Banking with securities related transactions certain Principals are registered investment banking agents of M&A Securities Group, Inc., member FINRA/SiPC. M&A Securities Group and Founders are not affiliated entities. For more information, visit