In private credit, the character of your deal sourcing determines the destiny of your portfolio. How new transactions come in the door, and how you choose the best ones to close, drive your performance. Nothing else matters. As we’ve learned in this series, private credit developed from the core middle market (CMM) (see Chart of…

As we highlighted last week, the zero-rate period post-GFC allowed private equity firms to buy companies with higher leverage and sell them at higher multiples. For the largest direct lenders, this included mega software businesses with increasingly borrower-friendly financing terms. Reality returned in 2022 as SOFR soared from zero to 5%. Financing costs became headwinds,…

According to iCapital, private credit refers to “tailored financing options – typically loans – that are directly made to strategically identified companies by non-bank lenders. These…may include direct loans, distressed debt, asset-based loans or specialty finance solutions.” Unfortunately, the term has become a stand-in for bubble risk, panicking retail cash, and scavenging insects. This framing…

“Private credit is, by its nature, still an illiquid asset class.” No amount of wishing will make it otherwise. As a superb report by Hightower Advisors details, understanding that truth is key for retail investors to sort through today’s market noise. For while private credit is being held for questioning under suspicion of…well, everything, hundreds…

For most of its history, private equity was built for institutions – pension funds, endowments, sovereign wealth funds. Individual investors were limited to the ultra-wealthy who could write large checks, tie up capital for a decade, and navigate the nuances of limited partnership structures. In recent years, technologies have developed allowing retail investors to gain…

Private equity firms spend considerable time finding the right business, market, or operating model before making an investment. This is fundamental, not opportunistic. Firms develop a long-term view on which industries or types of companies provide the best growth prospects, and they are selective about where they deploy capital. It should not be surprising, then, that once…

Diversification is an important topic and a strong consideration for any portfolio. It can come in many forms. In public markets, geographic diversification is often treated as a default best practice. However, in private equity, there is a compelling case for concentrating exposure exclusively in the United States rather than spreading capital across international markets….

Private equity is often portrayed as a blunt and ruthless strategy – an industry dominated by corporate raiders that slash costs, strip assets, and leave behind a trail of wreckage. This narrative poorly relates how private equity operates and what ultimately drives success in the asset class. Most private equity firms aim not to impair…

When private equity makes the news, its typically large buyout firms. They buy mega companies, so unsurprisingly make for better headline material. But bigger funds are just the tip of the iceberg. Below the surface is a scaled and matured middle market.  Purchasing dynamics favor the middle market (MM). Large US buyout funds (defined as…

Modern portfolios are largely shaped around public markets, which are influenced by public sentiment as much as underlying fundamentals. However, most US businesses are privately held and accessible only through private equity. The merits of PE as an asset class are manifold, including benefits beyond returns. This week we discover why private equity is an…