Structured Debt Finance for Healthcare Companies
In past communications we examined the changing regulatory landscape and its impact on short term investments. The catalyst for these changes was the credit crisis as government agencies scrambled to fortify the poor liquidity and over-leverage in the financial sector. The crisis also proved to be a catalyst for the evolution of the debt financing markets for many of the companies we serve. With the IPO markets shut down, M&A activity at a crawl, and the venture capital industry retrenching, the seeds for new financing alternatives were being sown for companies in the healthcare/life sciences industries. Private funds began to fill a lending niche that served rapidly growing life science companies looking for alternate sources of funds beyond equity.
The emergence of these lending sources began to impact the competitive landscape for debt funding historically controlled by venture banks and a small group of venture lenders. This post-credit crisis shift in the competitive landscape began to become very visible to our Debt Consulting Group. After collecting in excess of a thousand term sheets over the years, we began to notice a subtle, then more rapid change in standard benchmark terms as traditional lenders adjusted to the new competition. This increased competition has certainly been welcome news to borrowers over the past several years. To be sure, there are pros and cons to debt financing, but better terms and more financing options have been a major benefit to an industry that was starved for options during the financial crisis. So, as larger banks lose some flexibility on the lending front through increased regulation, a variety of new debt funds have emerged to provide much needed capital, unique lending terms and creative structures. To explore this landscape shift in more detail this month, our Debt Consulting Group investigates how structured debt financing for healthcare companies is changing the lending landscape.
Best Regards,
Ben Campbell
President & CEO
Please click here for disclosure information: Our research is for personal, non-commercial use only. You may not copy, distribute or modify content contained on this Website without prior written authorization from Capital Advisors Group. By viewing this Website and/or downloading its content, you agree to the Terms of Use & Privacy Policy.
