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Wall Street banks including JPMorgan Chase & Co. and Bank of America Corp. are in talks to provide as much as $8 billion in financing for a buyout of DocuSign Inc. Representatives for JPMorgan, Bank of America, DocuSign, Jefferies, Deutsche Bank, Bain and Hellman & Friedman declined to comment.
Investmentbanks, which faced significant losses on risky merger and acquisition (M&A) loans due to a spike in global interest rates, are now aggressively returning to the leveragedbuyout (LBO) market — one of the most profitable sectors in finance, according to a report by Bloomberg.
The report cites unnamed sources familiar with the matter as revealing that the private equity firms have started consulting with investmentbanks in preparation for a potential sale process, expected to begin in early 2025.
While Hercules and Horizon typically compete for the same business, Ares is slightly different because it focuses on middle-market companies that may fall off the radar of investmentbanks and other BDCs. The company's superior reputation and generous returns have attracted some of the largest investors in the world.
The proposed amount of funded debt from private lenders would be significantly higher than seven times PowerSchool’s earnings, according to Bloomberg’s sources, which banks may struggle to match due to regulatory constraints.
Rather, many of the companies in Ares' portfolio are lower middle market businesses that go overlooked by investmentbanks or private equity investors. ARCC Price to Book Value data by YCharts At a price-to-book (P/B) ratio of just 1.1, Ares stock is trading essentially in line with its 10-year average.
This week alone, Bloomberg News reported on direct-lending firms working on plans for potential multi-billion dollar buyouts of Adevinta, Kereis and Iris Software. The industry growth is being driven by investmentbank caution around underwriting leveragedbuyouts given volatile market conditions.
Leveragedbuyout financings accounted for almost half (42%) of all UK transactions in H1 2024, compared with just 29% in H1 2023, according to the latest MidCapMonitor report by global investmentbank Houlihan Lokey.
This is an interesting strategy, and has helped Ares earn a positive reputation among businesses that often go overlooked by large investmentbanks. By contrast, Ares has the ability to complete much more sophisticated deals, including leveragedbuyouts.
There are many companies in need of capital or advisory services, but they are not big enough or deemed suitable by investmentbanks. This is where Ares comes into the equation. Like Hercules, Ares also has a low nonaccrual rate of just 1.7%.
Lately, much attention has been lavished on Ares Capital, the unit created in 2004 to provide financing for middle-market acquisitions, recapitalizations, and leveragedbuyouts. The amount of business that banks do with us now is more than it has ever been.” In 2022, Ares’ direct lending tied to such buyouts totaled $26.4
Ultimately though, whether a record $10bn+ deal is agreed or not, depends on how well investmentbanks, the traditional source of finance for leveragedbuyouts, manage to regain the ground they have lost to private lenders over the past 18 months or so, said Hirschmann.
Winter focuses on cross-border and UK acquisition finance and restructurings, advising investmentbanks, alternative credit providers, corporate borrowers and private equity sponsors on various debt capital structures in the European large-cap and mid-cap markets.
This is an interesting approach because Ares tends to work with businesses that may be perceived as too risky for other BDCs or may not fit the ideal client profile for an investmentbank. At a P/B of 1.05, Ares is trading right in line with its 10-year average.
Dee Kuchukulla (New York) guides leading private equity sponsors and their portfolio companies on an array of complex transactions, from leveragedbuyouts and sales to carve-outs, cross-border deals, joint ventures, and take-privates across industries. She brings a deep understanding of technology and consumer brands.
Historically, the focus was on leveragedbuyouts and cost-cutting to boost profitability, but this approach is no longer sufficient. With over 15 years of experience in investmentbanking, asset management, and private equity, Lou helps align Zanders’ value proposition with investor value creation strategies.
Prior to joining JMI, Larry was an analyst in the multi-industries group in the investmentbanking division at Merrill Lynch & Co. Suken is responsible for sourcing and evaluating investment opportunities as well as providing strategic and operational support to portfolio companies. Suken Vakil , Partner, joined JMI in 2012.
SCP provides public and private companies with capital for purposes of growth, recapitalization, and leveragedbuyouts. SCP identifies opportunities to work with industry-leading management teams with a long-term perspective. For more information, see www.stephenscapitalpartners.com. Stephens Inc.
And that was very important because when this was the dawning of what is now a big analyst program across the country in all banks and investmentbanks. There was no m and a departments in any investmentbank really until the very late seventies. And I was fortunate to be accepted to both.
And what was interesting was the first leveragedbuyout of a public company happened when I was in graduate school. KLINSKY: In 1979, it was the first leveragedbuyout of a public company. We had sold the family business, maybe buy another family business one day through a leveragedbuyout. KLINSKY: Yeah.
That whole distressed debt department at city 00:06:31 [Speaker Changed] Banks are wanting to sell? I work for a really senior guy in the investmentbank. But because these are really good businesses, which got levered, they got leveraged through these leveragebuyouts. There’s leverage.
Whereas Kleinman went in hard with his warning that “everything is not going to be okay” for buyout firms, Stavros joined in with the concession that his industry may have gotten “too creative” lately. When buyout groups do look to sell, PIKs, NAV loans and other kinds of excess baggage are creating obstacles.
The investmentbanks were stuck with syndications that they had committed to, to place in the markets with price caps on the, on the coupons. Another floating ra, another interest rate sensitive asset class or LBOs, highly levered leveragedbuyouts supported by floating rate liabilities. That’s an example.
Private credit lenders are in discussions to provide $4.5bn in debt financing for Sycamore Partners potential buyout of Walgreens Boots Alliance, as part of a plan to break up the pharmacy chain into separate business units, according to a report by Bloomberg.
UK sponsor-backed financing activity experienced a modest slowdown in Q3 2024, as ongoing M&A sluggishness and seasonal dynamics impacted deal flow, according to the latest data from global investmentbank, Houlihan Lokey.
One, two, there was a theory that these businesses had volatile cash flows and therefore couldn’t be leveraged, which was the, you know, the whole point of leveragedbuyouts. He was running the h and q investmentbank, and then Roger was my next door neighbor and very good friends with Jim.
billion) funds approach to investing. After nearly 20 years in investmentbanking, at Deutsche Bank and then Credit Suisse, in 2013 he moved to Borealis, OMERS infrastructure arm, to run infrastructure globally and then head the capital markets team. We decided to focus on our buyout efforts in North America.
So, I graduated from business school in 1987 and went to GE Capital for two years, financing leveragedbuyouts. I mean, you know, I probably shouldn’t have been doing it because I had been a journalist covering public schools and knew nothing about leveragedbuyouts. And I actually started out of business school.
But when you’re doing larger businesses, and we have clients that are pan regional, that are European, pan-European buyout players, or that are global buyout players that do global deals, US and Europe. Leveragebuyouts requires leverage. But they do ’em for larger businesses.
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