Q4 2019

Valuations & Opinions Group

Inside this Issue

Private equity backed portfolio company performance remains robust as market participants remain cautiously optimistic.

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EBITDA Adjustments

In Q4 2019, the magnitude of these adjustments was 24.4% of EBITDA, on average…

…as time passes following the close of a transaction, EBITDA adjustment decrease, but remain above 15%, on average…

…magnifying the observed changes in leverage and EV multiples if not for the increasing magnitude of adjustments to EBITDA…

…all while the frequency of total limits on EBITDA adjustments has increased, suggesting a judicious approach to new underwritings.

Note: Adjustments to EBITDA as a percentage of Adj. EBITDA are calculated by dividing EBITDA adjustments by the concluded EBITDA as used for valuation purposes. EBITDA adjustments are available for approximately 75% of companies in the database. EBITDA adjustment limit data from ~1,500 Credit Agreements from 2017 to present