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Business Valuation, Recapitalization, Selling Your Business

Debt Capital Market Update - Q3 2019

TKO Miller Debt Capital Market Analysis 

  • Leverage multiples remain at peak levels in M&A transactions due to an aggressive lending environment and the low cost of debt
  • Leverage multiples, as measured by Total Debt / EBITDA, increased from 3.9x in 2018 to 4.1x in 2019 (as depicted in the graph below)
  • Leverage conditions are expected to remain highly supportive over the next 9-12 months, but trade tariffs with China and Europe, a global economic slowdown, or uncertain political conditions are capable of shifting conditions back to lower, more historic levels
  • The aggressive growth initiatives for both strategic and financial buyers, and a greater ability to fund acquisitions will remain strong
  • The debt market is a key driver of M&A valuations; valuations will decrease when leverage multiples fall, and the cost of debt increases
  • Transactions are seeing decreased equity contributions in response to rising leverage multiples compared to 2018 levels (as depicted in the graph below)

Total Debt/EBITDA Multiples 

Steve Yahnke
By Steve Yahnke
on Oct 17, 2019 7:15:00 AM
   
Debt Capital Market Update - Q3 2019

TKO Miller Debt Capital Market Analysis 

  • Leverage multiples remain at peak levels in M&A transactions due to an aggressive...
Steve Yahnke
By Steve Yahnke
on Oct 17, 2019 7:15:00 AM
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TKO Miller Debt Capital Market Analysis 

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