Current State of Private Capital Markets:
The private capital markets have stabilized after the initial body blow of the pandemic and shut down of the economy.
Overall, capital markets liquidity remains strong, but there has been a shift in the sources of capital for middle market, private businesses.
- New sources of capital such as family offices, control investors opportunistically seeking attractive investment strategies and opportunistic funds have grown in reach
PE dealmaking continued at a frenetic pace in Q2 2021; through the first half of 2021, PE firms have closed on
3,708 deals, nearly two-thirds of their total deal value in 2020.
Debt levels have been steadily returning to pre-Covid levels since late 2020, and today, total debt utilization is largely unchanged from before the pandemic.
- The handful of deviations remaining point to further normalization.
Recent levels of deal flow have given investors increased capacity to dig into more complex credit structures.
- Borrowers are taking advantage of the opportunity to restructure legacy lending relationships.
- Concurrently, add-on deal structures are increasing.