Actionable Ideas for Companies and Sponsors

Opportunities for Financial Sponsors in a Tightening Market for Leverage

The current challenges of financing acquisitions in the leveraged finance market is causing financial sponsors to pursue a range of alternative approaches to creating value in both existing investments and in deploying new capital. These alternative approaches include: (1) non-cash mergers for portfolio investments which provide the benefits of synergy opportunities, increased scale, market consolidation and potential deleveraging; (2) “PIPEs” which provide public companies an ability to de-lever or to support attractive and transformational acquisition transactions (e.g., Carlyle’s $1 billion (16%) PIPE investment into CommScope to facilitate CommScope’s $7.4 billion acquisition of AARIS in November), and (3) minority transactions into other sponsor-owned private companies (e.g., Vestar’s significant secondary equity investment into Information Resources Inc. in November, joining New Mountain Capital as a lead shareholder going forward).