Debt Capital Market Update - Q1 2019

TKO Miller Debt Capital Market Analysis 

• Leverage multiples remain at peak levels in M&A transactions due to an aggressive lending environment
• Leverage multiples, as measured by Total Debt/EBITDA increased from 3.5x in 2012 to 3.9x in 2018 (as depicted in the graph below)
• The low cost of debt will fuel aggressive growth initiatives for both strategic and financial buyers (i.e. greater ability to fund acquisitions)
• The debt market is a key underlying driver of M&A valuations; valuations will decrease when leverage multiples fall and the cost of debt increases
• Transactions will see increasing equity contributions in response to lower debt multiples and rising purchase price multiples compared to 2017 levels (as depicted in the graph below)
• TKO Miller projects leverage conditions to remain highly supportive over the coming 9-15 months, but trade tariffs with China, a global economic downturn, or uncertain political conditions are capable of shifting conditions back to historical levels

Total Debt/EBITDA Multiples 

Debt and Equity Contribution by Year 

TKO Miller Recent Debt Financing Transaction 

TKO Miller Served as the Exclusive Debt Advisor for Oneida Airport Hotel Corporation 

By Steve Yahnke on Mar 27, 2019 7:05:00 AM