Private Equity Gearing up for Exits
23 March 2015 - 11:30PM
Business Wire
CIT Executive Video Offers Insights on Trends
in Private Equity Financing
A rising economy and the increased availability of financing
continue to give middle market company founders, and their private
equity partners, reason to sell their companies and take advantage
of high exit multiples. Lenders and banks are eager to provide
financing structures to make those deals come to fruition. These
are some of the observations expressed by Tom Hobbis, Co-Head and
Managing Director of CIT Sponsor Finance, a division of CIT Group
Inc. (NYSE CIT) cit.com, a leading provider of commercial lending
and leasing services, in the “2015 Private Equity Outlook”
(cit.com/hobbis), the latest piece of market intelligence in the
CIT Executive Insights (cit.com/executiveinsights) video series of
in-depth executive Q&As.
“The rebounding economy is creating a scenario where now is an
ideal time for owners and private equity firms to sell,” said
Hobbis. “Because of the availability of liquidity and lenders’
eagerness to lend, owners and private equity firms may not see exit
multiples like this for some time if they sit on their hands and
wait.”
According to Hobbis, the following are current trends to watch
for in the private equity sector in 2015.
- Three Important Factors to Consider
to Get an Offer Price to Buy: First, because the market is so
aggressive right now, having the right price is very important.
Second, having financing arranged beforehand will help your chances
of winning a transaction. Third, limit the amount of
contingencies.
- Unitranche Financing Increasingly
Prevalent: This single tranche structure is good for lenders
who appreciate less leverage and for buyers who can take advantage
of lower pricing. In the current environment, the all-in leverage
available from a unitranche deal may be the same as what might
previously have been available in the market four years ago.
- Family and Founder-Owned Companies
Benefit Greatly from Partnering with Private Equity Firms:
Whether they’re selling or growing their businesses, a private
equity firm can provide needed expertise and capital. Within the
middle market, family-owned businesses reinvesting in their
companies alongside a private equity owner is becoming a prevalent
trend.
- 2015 Outlook Is Positive: It’s a
sellers’ market. As long as the economy continues to improve and
financing remains plentiful, stronger businesses will come to
market for sale. Private equity firms may find it difficult to sell
their companies in five years at multiples that are higher than
they are now.
According to the Private Equity Growth Capital Council, there
are more than 3,300 private equity firms in the United States that
own more than 11,000 businesses, which employ roughly 7.5 million
people.
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About CIT Bank
Founded in 2000, CIT Bank (Member FDIC, Equal Housing
Lender) is the U.S. commercial bank subsidiary of CIT Group
Inc. (NYSE:CIT). It provides lending and leasing to the small
business, middle market and transportation sectors. CIT Bank
(BankOnCIT.com) offers a variety of savings options designed to
help customers achieve their financial goals. As of December 31,
2014, it had approximately $16 billion of deposits and more than
$21 billion of assets. cit.com/CITBank
About CIT
Founded in 1908, CIT (NYSE:CIT) is a financial holding company
with more than $35 billion in financing and leasing assets. It
provides financing, leasing and advisory services to its clients
and their customers across more than 30 industries. CIT maintains
leadership positions in middle market lending, factoring, retail
and equipment finance, as well as aerospace, equipment and rail
leasing. CIT’s U.S. bank subsidiary CIT Bank (Member FDIC),
BankOnCIT.com, offers a variety of savings options designed to help
customers achieve their financial goals. cit.com
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740-5390Senior Vice President of Corporate
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