PortCo Deterioration
Curious, is anyone starting to see an uptick in poor PortCo performance? E.g., EBITDA coming down meaningfully or outlook is very bleek?
Haven't seen too much weakness yet in my bank's LevFin book but, we haven't gotten 12/31 numbers for the most part -- and quite frankly, I don't expect to see material weakness until Q3/Q4 this year (perhaps Q1 will start to show some early signs?)
Hoping that your title is not commensurate with your actual working role. Clearly, there are inelastic industries that are thriving in this inflationary environment and taking every dollar of price increase to the bank. Unfortunately, for those in the more elastic space, things are tightening; there are layoffs, cutbacks in marketing, low investment in infrastructure, and overall hesitancy.
PE firms are trying to squeeze EBITDA by making cuts, but if the top line isn't there, it simply isn't. No amount of cuts is going to drive growth to outpace the decline in topline.
If you have an industry with large amounts of operational leverage you can do it. 90% fixed cost industry that you cut all the fat after doing some rollups - doesn’t matter if organic revenue down 5% when you bolt on 10% inorganically and cut half of each workforce.
Agree, but you're talking about a subset of a subset. OP's question was very broad and I tried to caveat my response as such. I do think there are opportunities out there for multiple/bolton arbitrage, but I think it's tougher when multiple sectors are seeing an overall decline in topline.
Yeah but you still gotta pay for those roll-ups, so even if top line is growing inorganically, you're still bleeding out cash in the process, no?
Nah we just adjust ebitda and book a bunch of accruals to show improving performance
This may shock you, but a lot of the time we just misrepresent things to the lenders
Agree with the others, but would also say in my portcos not seeing any signs of slowdown, recession, etc. More demand than they can even handle. All in industrials fwiw
In healthcare, PortCo's generally have too much demand, but some facing pressure from costs and working capital. Seems consistent across large to small cap.
GAAP is for saps
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