资本市场更新

Capital Markets Overview Process / Execution Overview Our approach is differentiated given our professionals’ deep principal investmentexecution expertise, allowing us to take ownership and drive an efficient and cost-effective engagement from early reads, marketing, and term sheet all the way throughdocument and terms negotiation and closing.We also integrate our industry bankers’ sub-vertical expertise to provide another layerof value add in effectively positioning our client’s business to optimize market interestand terms. Cascadia’s Capital Markets practice focuses on serving our private equity sponsoredand non-sponsored relationships with full-service advisory and execution of financingtransactions to facilitate acquisitions, growth capital, structured capital, and internalrecapitalizations.Our practice provides complete customized capital structure advising from debt-to-equity financing. InvestorsWe have long-standing relationships and active dialogue with premier investors (banks, direct lenders, private credit funds, BDCs, equity funds, and family offices) with theability to invest across the capital structure. Growth EquityUnitrancheMezzanine / Subordinated DebtPreferred and Common Equity Acquisition Financing for PrivateEquity and Private CompaniesStructured CapitalRecapitalizations Process includes: investor presentation and model, populating data room, investoroutreach and diligence, review and negotiation of term sheets, confirmatory diligence,and closing and funding.Our team manages all aspects of the capital raise to minimize management andsponsor time commitment.Approach agreed upon number of commercial banks and private credit funds out ofCascadia’s network of capital providers.Include existing relationships in the process to create a competitive process resultingin the best economical terms and structure.Leverage Cascadia’s industry and company knowledge / materials to drive anefficient and expeditious process to meet desired timelines. Capital Markets Leadership Team Carle Felton Kayla CartoskiVice PresidentCapital Marketskcartoski@cascadiacapital.com Managing DirectorHead of Capital Marketscfelton@cascadiacapital.com Cascadia CapitalCapital Markets Market Update As of December 2023 Debt Market Update - General Terms continue to shift in the borrower’s favor as direct lenders manage competitionfrom two angles: themselves and the liquid credit markets. The direct lending market continues to grow. Direct lending fundraising and dry powderis at record high driving lenders to be competitive, leading to more borrower friendlystructures. We expect lenders to be aggressive and eager to deploy capital in 2024,following the slow down of 2023. Looking ahead, deal flow, interest rates, inflationary pressures, and the economy are topconcerns in 2024. We are cautiously optimistic for a solid M&A run in the first quarter,based on auction activity in recent weeks for LBOs, including sponsor-to-sponsor flips.Meanwhile, portfolio company data on TTM performance will begin surfacing in the firstquarter, giving lenders a truer picture as to how borrowers have been coping with higherborrowing costs for the past year. We continue to focus on structures and solutions tomaximize leverage and reduce the interest cost burden. Average EBITDA: As activity slowed across the market, average EBITDA for 4Q23dropped to $55mm from $63mm in 3Q23. Spread: Spreads dropped in the second half 2023. For 4Q23 average LMM spread decreased 7 bps to S+618 compared to S+626in 3Q23, following a gradual decline since Jun-23. Spreads were noticeablyhigher in the first half of the year, peaking at S+654 at the end of Jun-23.For 4Q23 average non-uni spread decreased to 31 bps to S+594 compared toS+625 in 3Q23. The average has shed 39 bps since Jan-23 and 64 bps sinceJul-23’s peak.For 4Q23 average unitranche spread decreased 31 bps to S+597 compared toS+628 in 3Q23. Interest Coverage: The average interest coverage remained flat between 3Q23 and 4Q23 at 2.0x.Since 3Q22, the average interest coverage has been at the lower end of the 2x-3x comfort zone,ranging between 1.9x-2.2x. Borrowers are coping with higher interest costs in several ways includingpassing the cost to customers, cutting costs and headcounts, pausing M&A activity, and loweringleverage. Borrowers are also turning to preferred equity or holdco PIK financing, which allows thebusiness to get 1x-1.5x turns of leverage on top of their existing OpCo debt to alleviate any cash flowconstraints and improve liquidity profile. •Discount: Average issue prices increased to 98.02 in 4Q23, which is the first time theaverage has been above 98 since 3Q22, when the average was 98.21. Debt Market Update – Dry Powder & Market Size Overall volume may be down, but funds are larger than ever as investors look to capture double-digit senior secured returns on fatter base rates that are expected to hang around for some time.The average fund size