NEW YORK--(BUSINESS WIRE)--Private equity firms are racing to beat the fiscal cliff and have increasingly accessed the debt markets this year as readily available capital has allowed them to refinance and recapitalize their portfolio companies, so much so that it’s driving pricing to pre-crisis levels according to Tom Hobbis, Managing Director and Co-Head of CIT Sponsor Finance at CIT Group Inc. (NYSE: CIT) cit.com, a leading provider of financing to small businesses and middle market companies. This is one of the many topics Hobbis covers in “Financing the U.S. Middle Market,” (cit.com/vodcasthobbis), the latest in a series of in-depth executive video Q&As featured in CIT’s Executive Insights video series (cit.com/executiveinsights).
Deals are Getting Done
Hobbis indicates that the market is fairly receptive to good middle market credits, saying: “There’s an active pipeline across a variety of industries so deals are getting done. If there are problems moving deals, changes in pricing or amending structure or upfront fees can get the deal done.”
Stable businesses with recurring revenue streams are attractive because their future performance is easier to predict. “The reason private equity firms put leverage on deals is because it enhances their returns and makes them more profitable,” says Hobbis. “This is critical since private equity firms live from one fund to the next and having better returns makes it more likely they will be able to raise future funds.”
Growing Portfolios and Communities
Private equity firms are always looking to grow their companies and their portfolio businesses. “There's a natural tie into helping these companies grow, and providing financing fuels the engine that drives the small and middle market,” says Hobbis. “There's absolutely a correlation between the success of the middle market companies we finance and the communities in which they’re located.”
Quarterbacking the Deal
CIT Sponsor Finance develops and manages relationships with U.S. middle market private equity firms. Hobbis comments: “We act as quarterbacks for the deal process. We have relationships with private equity firms, we know what they're looking for and we match them up with the right products, services and people.”
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Founded in 1908, CIT (NYSE: CIT) is a bank holding company with more than $33 billion in financing and leasing assets. A member of the Fortune 500, it provides financing and leasing capital to its small business and middle market clients and their customers across more than 30 industries. CIT maintains leadership positions in small business and middle market lending, factoring, retail finance, aerospace, equipment and rail leasing, and global vendor finance. CIT also operates CIT Bank (Member FDIC), BankOnCIT.com, its primary bank subsidiary, which offers a suite of savings options designed to help customers achieve a range of financial goals. cit.com