CrossCountry Consulting Featured in Popular Finance Industry Media, “TheStreet”By: CrossCountry Consulting
(McLean, VA) CrossCountry Consulting, a Washington, D.C. area financial services consulting firm leverages Director, Bruce Klein’s insight on Business Development Companies (BDC’s) with leading digital financial media company, TheStreet. Klein, CrossCountry’s New York-based Director is featured in Ronald Oral’s February 12, 2014 article titled, “Debt Hike for Business Development Companies in Works.”
According to TheStreet, Rep. Carolyn Maloney (D-NY) supports legislation that would allow Business Development Companies (BDC’s) to increase their leverage as long as the debt hike gets shareholder approval first. In Oral’s article, Klein notes that the recently finalized Volcker Rule, which makes the issuance of Collateralized Loan Obligations more difficult, could provide an opportunity for BDC’s to gain market share. “What is happening with CLOs under the Volcker Rule could drive more investments in BDC’s, particularly if they could do bigger deals,” Klein tells TheStreet.
A variety of new regulatory rules and capital constraints have made lending to small mid-market companies less attractive to banks. A small but growing group of firms known as Business Development Companies (BDC’s) is stepping in to fill the void. Klein’s comprehensive Thought Leadership article, titled, “Business Development Companies: Your New Middle Market Lender,” details how BDC’s have the ability to fund their loans by raising money from the public via an IPO or from wealthy investors via a private equity type structure. Klein further explains how banks are also willing to lend to BDC’s and even the Small Business Administration has a program to help them.
Klein tells TheStreet, he doesn’t think BDC’s would become overleveraged if debt caps were raised because even today most BDC’s are not coming near their current leverage cap. In addition, BDC’s looking to raise additional capital via a secondary offering must be trading at a premium to Net Asset Value. “If they are viewed as less safe they won’t be able to do a secondary raise,” he said.
For more information on how BDC’s work, the way they raise capital and how they are starting to change the commercial lending landscape, reference Bruce’s thought leadership paper, “Business Development Companies: Your New Middle Market Lender.”