Deal Pricing Climbs In Fourth Quarter

Deal Pricing Climbs In Fourth Quarter

With the Fed’s recent decision to raise interest rates and increased pricing in the institutional market, pricing for middle-market deals increased slightly in the fourth quarter. As the latest issue of Transaction Trends discusses, liquidity is expected to remain high and potentially increase as firms—both balance sheet lenders and funding vehicles—reset their budgets and asset management goals for 2016.

Despite a decline in overall market activity, leverage in the fourth quarter remained at historically high levels. On a TTM basis, there’s been a higher frequency of senior/subordinated transactions relative to senior-only transactions, which has likely been driven by continued upward pressure on purchase multiples.

Meanwhile, as outsourcing has deeply penetrated every major industry vertical in the...