Distress investing: Crime scene investigation
The ultimate murder weapon is almost always leverage and financial sponsors the main culprits
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IN THE underbelly of private markets lies the main culprit behind corporate failures: defective capital structuring.
Frequently the result of human failings, the widespread overcapitalisation of startups and quasi-universal overleveraging of buyouts have led to a deep-seated zombification of private markets.
With interest rates remaining at or near 20-year highs, ballooning interest expenses will continue to cause cash-flow incontinence. A whole new landscape for private capital fund managers and their portfolios could shape out.
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