MIDDLE MARKET
Database
Q1 2020 | COVID-19 Edition
Valuations & Opinions Group
Inside this Issue
With leverage covenant testing and expected declines in performance on the horizon, Q2 2020 will be a true test of company performance.
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Inside this Issue
Lincoln International observes declines in enterprise values and private credit instruments in the first quarter of 2020 with no safe haven industry.
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Historical Performance - Enterprise Value
Declines in the enterprise value of private middle market companies were comparatively muted—declining 7.5%—compared to the sharp 16.0% decline of the S&P 500.
Note: S&P 500 EV excludes financial companies for which enterprise value is generally not meaningful; including such companies produces qualitatively similar results
Although the declines in Q1 2020 were dramatic, the declines in most industries served primarily as a correction, erasing the gains from the last ~15 months.
Industry Performance - Enterprise Value
As shock waves hit the markets, there were no safe spaces to turn to as declines hit valuations across all industry segments. Decreases in the Lincoln MMI were most severe for COVID-19-impacted industries including Industrials and Consumer with an average decline of 8.6%. Technology and Healthcare were also impacted, down an average of 5.3%, given their stable earnings.
