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Hard to give specifics, but LMM PE seems to be in for it - lots of PortCo's bought in 2021/2022 at Peak EBITDA showing declining trends and high rates are really starting to bite. Doesn't take much of a decline in EBITDA (10-20%) for the cracks to start forming. The longer rates stay here, the more weakness you're going to see.
I'm very bearish on PE in general right now, especially those focused on certain segments of industrial, certain segments of HC, tech that was bought at 100x ARR, etc. That said, without having insight into their entire portfolio but rather only a PortCo or two, hard to really say for sure - one homerun can make up for more than 1-2 duds.
Naturally, PC will also get hit. While they're higher in the cap stack than the equity, losing their ass on 1-2 PortCo's is very hard to recovery from bc they don't have the upside equity has on other deals within the portfolio.
It's coming... just taking longer to play out than most have expected.
Typical lazy LevFin take
What makes you bearish on industrial? Just think that valuations over last few years have been to high and the multiples come back to reality?
Healthcare has more tailwinds now in HCIT / pharma services. I will say PE firms who've invested heavily in HC Services rollups are struggling a lot lately. Had an interview process at a PortCo that falls under that umbrella a few month ago and it looked like they were in really bad shape. Stopped being acquisitive and were desperately trying to improve their current cost / operation structure. On the other hand, a contact of mine works at a HCIT PortCo and is recently working on integrating a tuck-in acquisition.
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