Looking for book recommendations that cover how direct lending/mezz businesses are structured/built. Bonus bananas for anything that pertains to building a mezz financing business for LMM companies.
I am NOT looking for books on how specific products are created/structured. I want something that explains how a mezzanine lending business is built and the considerations that go into it.
Bump
Interested as well
Janet tavakoli wrote something published by Wiley. I think it's called credit derivatives and synthetic structures
She also wrote Collateralized debt obligations and structured finance
Private Debt by Nesbit and Mezzanine Financing by Nijs are okay. I haven't seen a ton of great books out there on it. I'd go find some smaller BDCs and look through their public reports.
If you have any specific questions, I can try to answer.
Great stuff man - are there any books on special sits?
Not as familiar with that space so not sure of anything directly related, although I'm sure its out there.
Some that might be interesting for special sits more generally:
Agreed - Private Debt by Nesbit. Also, the LSTA has a pretty solid book on credit agreements.
Anyone else has other books to reco?
Stephen Moyer has good resources out there
I have distressed debt analysis. Looking more for the business end than the "what is it" portion.
Hey mate noticed you've read quite a bit about debt / distressed investing - curious if you're in the industry or looking to move into the industry? Would be interesting to hear more
I don't know why there would be an entire book on what you're asking for (which is very specific), maybe a chapter of a book or more so a sub chapter or better yet an article.
Its a fairly simple business model - you raise a fund, have bd guys source deals via relationship with sponsors and have an investment team diligence said deals / monitor the companies.
It would be nice to know what best practices are + which pitfalls to watch out for. I learned conventional PE through books and hiring people with a PE background but I can't seem to find similar resources on the debt side.
There’s a book called principles of leveraged finance I bought a few years ago. Not cheap and not comprehensive but it provides a decent overview of the way loans are underwritten and syndicated. Bought it on amazon.
Many of the capital providers in the leveraged finance market are obviously private debt funds so two sides of the same coin. Doesn’t really talk about mezz from what I recall but at the end of the day mezz is underwritten by most of the same principals. Just different holders / return expectations.
Sounds like what you are looking for is unlikely to be found in literature. Building a credit business involves finding a niche of demand that isn't being supplied and providing a solution to those in demand.
Most of the credit guys are ex-bankers and non-bank senior lenders that really understood capital structure and documentation and broadened their ability to finance (vs. being confined in a traditional institution).
Right now, mezz and unitranche is terribly competitive, so relationships and "looks" are important. IMO, the best portfolios have a mix of sponsor-backed and privately held credits, but that's difficult to do and the non-sponsor opportunities take years to build out.
There are some really quirky models that have supposedly provided good risk-weighted returns, such as CapX Partners (Chicago), Merit (Chicago), Main St (BDC), Callidus (Toronto), White Oak (SF), VPC, Medallion (MPLS), Convergent (MPLS), Lateral Investment Mgmt (SF)
(1) Standard LLC, (2) Season and Sell, (3) US Corp. Blocker, (4) Closed-End Registered Investment Company
+1 for LSTA on credit agreements
PM’d you some links to check out
Very informative thread - anyone has pdf versions they can share or have links to download some of these books?
Cheers
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