due diligence Archives | The Gaffin Group

Critical Elements of an Effective Leveraged Lending Platform

November 2, 2016

banking, due diligence, free cash flow, lending, middle market, private equity, value creation

What does it take to be an effective middle-market leveraged lender? Are traditional lending models obsolete? Is this sector now the domain of non-bank debt investors? Whether you are a private equity investor, operating company, or co-lender, these questions can be pivotal to deal viability over the investment horizon. Finding out, mid-deal, that one or…

High barriers…to understanding

August 18, 2016

Mark Gaffin

due diligence, finance, lending, middle market, underwriting

In what has to be the second most often used throw-away line behind “[insert name] is a leading [insert industry sector] company“, is the too-frequent, inadequately supported, drive-by industry analysis summed up by “high barriers to entry.” This becomes a nails-on-chalkboard experience when so often misused by non- or under-initiated underwriters, lenders, and pundits. Let’s take a step…

Is LBO Lending Specialized?

May 15, 2016

Mark Gaffin

buyouts, due diligence, free cash flow, lending, middle market

“Ignorance more frequently begets confidence than does knowledge”. – Charles Darwin I am often asked whether middle market LBO lending is specialized. To a great extent, the answer is “yes”. Certainly, there are essential elements of transaction analysis, underwriting, and account management in middle-market leveraged deals that require a more sophisticated approach than is typically…

The Peril of Pytr Prynciple and the Bank Meeting

February 5, 2016

Mark Gaffin

due, due diligence, lending, middle market, underwriting

We received such fascinating feedback on our post on relationships in commercial banking being a double-edged sword (see, “The Most Expensive Word in Banking? ‘Relationship’”) that we wanted to capture it in a follow on piece. Based on many of the war stories we heard, the topic touched close to home for many. Most wondered…

The Most Expensive Word in Banking? “Relationship”

October 30, 2015

Mark Gaffin

due diligence, lending, middle market, underwriting

Commercial bankers, especially those in the core and lower middle market, face so many obstacles to growth and profitability – from a looming regulatory environment to nimble, creative non-bank competitors – that it’s a wonder some don’t throw their hands up in despair and go fishing. But there is hope for those willing to address…

Giving diligence its due

May 15, 2015

Mark Gaffin

due diligence

“Diligence is the mother of good fortune.” – Miguel de Cervantes “Ignorance never settles a question.” – Benjamin Disraeli Based on comments that I received on my May 29th post, I think further light could be shed on my bias toward an elevation of skills as one moves into the leveraged lending arena. Not…

The Middle Market has a Weight Problem

November 12, 2014

Mark Gaffin

due diligence, middle market, private equity, underwriting

Beneath the screeching Klaxon alarms, raised by frenetic media on all things related to deal making, lies a deep – and historically vibrant – Middle Market. Undaunted, intrepid reporters dash through press rooms clutching another article decrying companies “laden with debt”, “leverage limits”, “criticized assets” of the if-it-bleeds-it-leads meme – while a vast sector of the economy…

The CIM…sales document or due diligence?

May 16, 2014

Mark Gaffin

buyouts, due diligence, middle market, underwriting

In larger middle market transactions we typically see senior and junior debt facilities with multiple lenders. Given tight timeframes in most LBO transactions, a delicate balance is struck between how much reliance can be placed on the confidential information memorandum (the “CIM”, also known as a bank book, etc.) and how much will be invested…

Wall Street Journal misses on Bank article

January 31, 2014

Mark Gaffin

buyouts, due diligence, middle market, public policy, regulation

While I have great respect for WSJ’s reporting overall, I think they got several material points wrong in a recent article on banking (“Banks Sit Out Riskier Deals – Regulatory Pressures Push Some Lenders to Let Lucrative Deals Go” 01/21/14). Based on my experience from front-line leveraged lending and my privilege of being involved with…

The Power of Focus: Optimizing PE Portfolio Investments

November 16, 2013

Mark Gaffin

agency costs, due diligence, private equity, value creation

We have reached a point in the maturity of the private equity industry where wheat is being cut from chaff. Overall, LPs are more sophisticated in their due diligence of funds and general partners – and the latter strive to differentiate themselves. One compelling differentiator is a replicable approach to maximizing market value of portfolio…

due diligence

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