SPP Capital Partners shares its latest monthly update on the US Private Capital Markets: 

How much data do you need to see to become comfortable with the direction of the US economic climate?

The US economy is growing faster than any other developed country.  We remain at full employment.  Inflation rates have moderated for several months at well below 3%.  Our economy is the envy of the post-Covid world.

In response to these points and other strong economic indicators, the Federal Reserve cut interest rates by an aggressive 50 basis points while indicating that more rate cuts are coming.

There are points of uncertainty that remain in our economy; there always are and will be.  Macro trends are pointing to a soft landing, lower capital costs and an opportunity for mid-cap companies to plan for and execute growth and liquidity strategies with the wind at their backs.

While commercial banks remain conservative in their approach to mid-cap borrowers, institutional non-bank direct lenders are growing aggressive.  This can be seen in a tightening of lending spreads over SOFR rates.  For such lenders, it is a “Risk On” environment.  This is another data point that can be referenced by mid-cap companies:  credit professionals of the fastest growing source of capital for mid-cap companies have the confidence to invest.

Owners and CEOs of mid-cap companies are in position to act on long-considered growth opportunities, whether through organic initiative or acquisitions.  With a strong economy and capital available, the question to solve for is how to make your business as competitive – and valuable – as possible.

If you remain reticent and/or risk averse in the face of overwhelmingly positive macro-economic trends, it may be prudent to seek liquidity through the sale of all or a significant portion of your business.  While “bubble pricing” for corporate sales has abated, full, fair valuations are still the norm for healthy companies.

 This is a time when doing nothing may be the highest risk strategy.

If you would like to discuss your company’s funding requirements and opportunities, please reach out to:

Mark S. Taffet
CEO
MAST Advisors, Inc.
P: 201-342-3170

mtaffet@mastadvisors.com