The Corner Series SBIC Fund Trends, Deal Structures, and Challenges with Parkway Capital’s Andy Silverman
Closing a deal requires a lot of give and take, and in times of uncertainty, the right sponsors will have your back.
On this episode of The Capital Corner, McGuireWoods' Geoff Cockrell joins Andy Silverman, Managing Director at Parkway Capital, to discuss the trends, deal structures and challenges that an SBIC may see in the market right now.
Geoff and Andy explore topics related to investment and underwriting, including the significance of independent sponsors in Parkway Capital’s deal flow. Andy notes that being a long-tenured capital partner of independent sponsors allows his firm to make informed decisions on which deals to pursue, with eight of their current nine portfolio company deals being independent sponsor-led deals.
The evolving market has affected how EBITDA multiples are considered for mezzanine debt. Compared to previous years, there have been lower prices and a decrease in total funded debt requested by sponsors due to a decline in values and rising interest rates.
The current underwriting environment has also presented new challenges, with companies experiencing pandemic-related benefits performing better than they would have otherwise. This can make it difficult to determine the baseline performance for the company, particularly with younger companies that were founded around 2020.
The senior cash flow lending market has also tightened up, with credit officers declining deals they would have previously approved.
Despite these challenges, it’s important to keep the deals coming. “We continue to try and fill the pipeline because it really is a numbers game. You need to have X number of deals in order to put out Y LOIs to close Z deals,” Andy says.
Featured Guest
Name: Andy Silverman
What he does: Andy is the Managing Director at Parkway Capital, the mezzanine credit affiliate of Calvert Street Capital Partners. He helps manage the mezzanine investment business. Prior to Calvert Street / Parkway Capital, Andy was a partner at Capital Resource Partners (CRP), a long-standing private investment firm.
Organization: Parkway Capital
Connect: LinkedIn
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