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The Evolution of Private Capital Markets and Restructuring Dynamics

With the exception of certain out-of-favor industries, such as retail and oil & gas, the pace of restructuring activity has been relatively slow over the last five years. Partially as a result, market participants have continued to anticipate potential catalysts for an imminent recession, including a slowdown in economic activity, a capital markets correction, or a major geopolitical event. In short, we’ve all been “calling” a recession in the next year for several years.

However, even if there are clouds on the horizon, vast quantities of investor funds flowing into private capital mean that borrowers continue to have abundant access to capital. To satisfy investor demand for higher yields, fund managers have continued to raise large funds, employing ever more creative strategies, and capital deployment has become the top priority.

Yet, the increasing complexity of the private capital markets requires ever more sophisticated capabilities to identify and manage risk. Amid such complexity, firms continue to struggle to recruit strong junior talent, given the rising generation’s lack of experience in this type of market. To outperform in the current environment and position themselves for the next phase of this cycle, lenders and investors alike must continue to evolve their approach and refine their strategy while closely monitoring risks.

Ted Koenig, president & CEO of Monroe Capital LLC, provides a private credit asset management perspective on current global trade issues impacting the U.S. economy and how these issues will affect restructuring insolvency in the future. He discusses the need for investors and restructuring professionals to understand global trade concerns and how these concerns impact dependencies regarding geopolitical risks and the overall global markets.

Darren O’Brien, a partner at Origami Capital Partners LLC, provides a private equity perspective through a review of the private M&A and financing markets. O’Brien shares concerns associated with these markets and discusses potential future challenges. Examples of these challenges include the potential negative impact of external owner issues on underlying companies/assets.

Next, Steven Migliero, Co-CEO of Crystal Financial, provides an asset-based lender’s perspective on recent evolutions in distressed lending and the potential negative and positive implications for lenders or borrowers. Migliero discusses competitive pressures to deploy capital, the general lack of industry experience in workout or distressed credit situations, and the positive benefits of technology in restructurings. 

Chris Dickerson and Matt Murphy of Paul Hastings discuss an industrywide trend developing in the creditor universe where aggressive action on equity pledged as collateral is becoming the norm. Dickerson and Murphy detail the impact of this recent trend, identify some of the likely causes, provide certain tangible examples of language giving rise to this scenario, and stress the importance of obtaining adequate legal counsel for firms.

Lastly, Paul D. Schuldiner, executive vice president at Rosenthal Trade Capital, highlights key indicators of potentially tumultuous and untenable financial situations for a company, traditional financing solutions to mitigate instability, and the value of utilizing a creative, flexible, and tolerant solution, such as purchase order financing, as a tool for situational turnaround management.

Jeff Unger

Jeffrey R. Unger

G2 Capital Advisors

Jeffrey Unger is the founder and CEO of G2 Capital Advisors. An accomplished senior executive, investment banker, and restructuring specialist with significant domestic and cross-border experience, he has led organizations to profitability and exit strategies through both uptrend and downtrend cycles. Unger has led or participated in more than 200 M&A and financing transactions and has led more than two dozen restructurings and turnarounds on behalf of financial institutions in and out of bankruptcy as both a CRO and turnaround professional.

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