Business development companies are facing one of their toughest challenges ever since Congress created them in 1980 as a way to encourage investment in small to midsize businesses. Today, as they reel from the effects of the coronavirus outbreak, the valuations of their portfolio companies have dropped as the risk of default has grown amid a liquidity ... READ MORE >
How private equity firms might qualify for SBA financing
In early 2012, The Atlantic published an article, “Private Equity Is a Force for Good” that gave a clear-eyed look at the industry and its impact on the economy.. Eight years later, the private equity industry, with billions in capital ready to put to work, is in a position to help the economy recover from the coronavirus pandemic by investing in growing ... READ MORE >
Companies tap $247.5 billion in loans under Paycheck Protection Program
Small to midsize business seeking relief from economic woes due to the Covid-19 pandemic have tapped $247.5 billion from the government’s Paycheck Protection Program through April 13, less than two weeks after the program began accepting applications, according to data released by the Small Business Administration on Tuesday. The data strongly imply that ... READ MORE >
How business development companies can weather the coronavirus downturn
The coronavirus pandemic has taken a severe toll on the American economy, with small and midsize businesses being hit especially hard. It’s not surprising, then, that the stock prices of business development companies, which invest in small and midsize companies along with distressed enterprises, have experienced the sharpest and fastest decline since the ... READ MORE >
SEC gives regulatory relief to certain business development companies
Continuing a recent push to ease regulations, the Securities and Exchange Commission recently adopted a final rule that loosens compliance requirements on business development companies, which invest in small and medium-size businesses. The measure, which was adopted on March 12, significantly raises the bar for a public registrant to be considered what ... READ MORE >
As coronavirus spreads, private equity contracts even as it prepares for a rebound
As the U.S. financial system and broader economy swoon from fear of the damage that the coronavirus will leave in its wake, private equity deal flow will soon begin to feel the pinch. Although data for the first quarter of 2020 is not yet complete, indications are that deal flow has slowed based on the dollar value, deal count and average premiums paid in ... READ MORE >
As hedge funds struggle, money flows to limited stakes in private equity firms
Amid the soaring markets of the past few years, some in the asset management community have faced a conundrum. Investors have demanded better performance, but asset managers who pursue alternative strategies, like hedge funds, have struggled to keep up. The result is that many hedge funds have closed down, rolled up into a family office or returned ... READ MORE >
As large ETF sponsors capture more of a surging industry, can the middle market keep up?
Exchange-traded funds, which have existed for just over a quarter century, have indeed come of age as an investment product. With approximately $4 trillion in assets under management and more than $1 trillion in net inflows over the past three years alone in the United States, ETFs have been propelled by the rise in popularity in passive investing over ... READ MORE >
The Fed walked a tightrope in cutting rates, and succeeded
In July, the Fed did what markets had been pushing for when it cut the federal funds rate by a quarter percentage point. But rather than calm the markets, the Fed only added to the concern when it did not send a clear message that there were more cuts to come. Advocates for more rate cuts maintained that the Fed was not giving enough credence to ... READ MORE >
Hedge fund performance may be tested—again
The average performance of the hedge fund sector since the Great Recession has lagged the returns of passive investments including broad-based equity index funds tied to the S&P 500 as well as exchange-traded funds. The underperformance of hedge funds, a risky but historically high-flying sector whose managers are compensated on their ability to ... READ MORE >