Friday, May 18, 2007

7 Things I Heard at LA Capital Marketplace

This morning I ate breakfast with about 45 other professionals active in the capital markets in the greater Los Angeles area. The group meets monthly to swap business cards, deals and market intelligence on the latest in financing transactions. In addition to commercial bankers, asset based lenders and factors, the hot coffee and bagels attracted international trade finance experts, business attorneys, investment bankers, CPAs, valuation professionals and commercial real estate brokers to name a few.

The topic of discussion was the question "what business trends are you seeing in the capital markets?" Of the many responses, here are seven things that caught my attention.
  1. I started the ball rolling by discussing the fears of stupid bankers and the thought voiced by some bankers that sanity will return to the capital markets only after a few large loan defaults.
  2. There's too much money chasing too few good deals.

  3. It's getting hard to find good acquisition targets. To keep from missing out, private equity is moving faster with less due diligence.

  4. The price of commodities is rising and profit margins are shrinking.

  5. Sellers of smaller companies are seeing the high price to EBITDA multiples of larger deals and are holding out longer waiting for the same.

  6. Too many people built their businesses by borrowing against the equity in their homes which is no longer available.

  7. Margin compression is causing the mezzanine debt markets to disappear.

Interesting insights to say the least.

One more that I left out. According to Joel Bagelman of Fidelity Mortgage Lenders, financial statements are only needed by lenders who are "sissies".

If you're in need of insight into the capital markets for small businesses, need help finding the right lender or telling your story the right way, then give me a call.

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