The NorthView Compass
November 2021 Edition
“It’s not how you start, but how you finish!”
…and its going to be a hell of a finish to a wild 2021. We’re over 3/4th of the way and, no surprise, 2021 continues to break deal activity records, for right reason too.
We sometimes feel like a broken record with all the inflationary talk (told you so) and overall M&A activity…don’t get us started on yet another stimulus bill.
2021 is a year for the record books in all things finance – stock market, crypto, M&A, capital markets, commodities – and if you haven’t already acted on or even thought about one of two things this year, your business will likely be left behind:
1: Access Debt – whether refinancing, growing, or acquiring, debt is the most liquid and cheapest it has been…for now. Lenders from Bank ABL to non-bank unitranche and everything in between are aggressively putting capital to work.
2: Sell all or part of your business – see our M&A section from the last 5 Northview Compasses. We’ve been focused on M&A activity because, well, you should be too. If selling your business is something you plan to do in the next 5 years, you may want to consider moving up that timeframe…you know, the whole “make hay, while the sun shines” thing. And you don’t have to sell all of it to take advantage of these ridiculous valuations…
Lastly, we wanted to give a shout out to our newest partner in Dallas, Mark Hoy. We’re excited about him joining our team. He brings a very interesting and complementary skill set to our engagements. Read more about Mark here.
Debt Markets Are Booming
To go along with the boom in M&A we’ve seen throughout 2021, capital markets remain strong as well. Companies are using more debt to fund their acquisitions and are taking the opportunity to refinance to their advantage in this environment. Additionally, with companies implementing new growth plans, many are utilizing the debt markets to access more working capital at low rates before rates potentially begin increasing.
Moving On From LIBOR
The move away from LIBOR has been discussed for years, but recently JP Morgan became the first major bank to turn that talk into action. They’ve sold the first corporate term loan not tied to LIBOR, paving the way for more loans to be brought to market without it in the near future as well. This new structure utilizes the SOFR benchmark instead. Now that the first domino has fallen, how are you handling the transition with your lender(s)?
For the backstory on LIBOR and why it’s being abandoned, check this episode of Planet Money from NPR. It details how the rate was originally conceived and ultimately exposed as a tool for widespread collusion among banks in 2008.
Other Recommended Reads
Even better than ’95?!
If some of us show up to meetings rocking pearls for a while, you’ll know why. Go Braves!
About NorthView Advisors
NorthView Advisors is a full-service, lower-middle market focused, investment bank that prides itself in establishing and maintaining meaningful, personal relationships with its clients and investors.
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