Benchmark prior transactions, bonds, loans or company profiles using over 300 credit metrics.

Comparables

AI transcripts & instant analysis, making earnings season easier than ever.

Earnings

A full suite of ESG data and analysis. Built for your workflow

Spot undervalued credits and potential future restructurings with our purpose-built tools.

Distressed and Restructuring

Full Financial profiles with 3 statements, KPIs, segment splits & credit metrics. All traced to source documents.

Financials

New deal analysis and covenant comparison tools, understand key risks in seconds not days.

Covenants

Say goodbye to CTRL + F with our powerful search. Thousands of documents text searchable for any keyword or phrase.

Search

We've successfully predicted more than 65 price sensitive events - before they happened.

Deal predictions

We use AI to aggregate newsflow from 2,000 sources, and deliver it to your inbox quicker than anyone else.

News

Track high yield deals from issuance through to maturity, with integrated legal, credit and ESG analysis.

High Yield Bonds

Shine a light on private markets with 9fin's news and legal analysis of syndicated loans

Leveraged Loans

21st century tech and expert analysis to help CLO teams make informed decisions faster.

Structured Credit 

Find information others can't see in one of the fastest growing corners of finance

Private Credit 

Shubham Saharan

This article is part of our new service, 9fin Private Credit. If you're interested in a free trial, contact subscriptions@9fin.com.

It’s a frustrating time to be involved in a sale process. Just ask the firms that were vying to be involved in an LBO for aerospace manufacturing and design company Gables Engineering earlier this year.

Private credit firms spent weeks putting together hundreds of millions of dollars in debt commitments to fund a potential buyout, only for the process to be put on hold as the possibility of a deal faded, according to 9fin sources. 

Weeks of painstaking work — valuation models, due diligence, term sheets — went down the drain.

Gables did not respond to multiple requests for comment on the sale process, or the reasons it was put on hold. But it’s far from the only company to suffer this outcome in recent weeks.

These abandoned sale processes create challenges for everyone in the dealmaking chain. However, one group feeling the impact most keenly is direct lenders, who have amassed huge amounts of cash in recent years only to find there are very few places to invest it.

“We're feeling the same pains as all our other peers, which is just a lack of M&A, a lack of exciting assets, and a lot of money chasing the few quality assets that there are,” said the head of private credit origination at a large asset manager. 

While some sponsors have abandoned sale efforts entirely, others have settled for stopgap solutions. 

Earlier this year, private equity firm Waud Capital Partners explored a potential sale for its portfolio company Health & Safety Institute, which it has owned since 2019. But it didn’t manage to sell the company outright.

Ultimately, the sponsor brought on Neuberger Berman as a minority shareholder and lender. Both firms declined to comment for this article, and HSI itself did not respond to a request for comment. 

This outcome is more positive than a completely failed sale process. For example, one source noted that even a minority sale requires a new valuation, which sponsors can then use to mark the asset. But it still means a lot of wasted time for market participants.

According to our reporting, direct lenders and investment banks alike were treating HSI as an active origination opportunity, even after the auction went quiet (failed sales often mean companies must address looming debt maturities). That opportunity is now off the table.

With a few interruptions, this M&A paralysis has been the prevailing narrative since late last year. 

In the third quarter of 2023, the total deal value of domestic US private equity activity dipped below $200bn for the first time since early 2020, when the pandemic shut markets worldwide, according to PitchBook. 

Alongside new deal volume, valuations have also plummeted. Last quarter, private equity exit values fell nearly 41%, according to PitchBook — their lowest quarterly level since the 2008 financial crisis, if you ignore the Covid slump.

Debt financing has also become more expensive and leverage ratios have contracted, making buyouts less cost-effective. In this environment, sponsors are holding onto assets for longer and praying for two things: for valuations to come back up, and for the cost of debt, which has risen sharply alongside base rates, to go back down. 

This is effectively causing a stalemate between sellers and bidders. 

“Valuations have come down, but sellers still have the anchor from a year or two ago, when valuations were much higher,” a private equity associate told 9fin. “So when they're looking to sell, they're still looking to sell at those levels.” 

“For buyers, there's less leverage available, as interest rates are much higher. There's a valuation disconnect a lot of the time, which leads to processes just breaking and trades not happening.”

Another recent example of a broken sale process is Audax Private Equity’s efforts to sell its portfolio company FDH Aero. Back in August, 9fin reported that the sponsor had hired investment banks including Jefferies to explore a potential sale. 

At the time, one source noted that “we’re starting to get back to the leading edge of the cycle for aerospace.” Fast forward just three months, and we reported that the sale process had failed to take off. 

This is another good example of how the dealmaking doldrums are impacting market psychology, especially among sellside advisors trying to close the year on a high. 

“Bankers have been desperate to try to salvage the year,” said a managing director at a private credit firm. “They got a little ahead of themselves in talking sponsors into trying to get something done. There were a lot of those kinds of false starts in late summer into September.”

These false starts have significantly thinned out the origination pipeline, despite many of the companies involved in these processes being in decent shape.

“It doesn't mean that companies are crapping out,” said the managing director. “That part of the story is actually quite good, thankfully. It's just that multiple compression is very real, and it's hard to recover from that.”

It’s a cliché that in M&A, the next big wave of new business is perpetually just around the corner. Even so, as private credit professionals look to the new year, they’re anticipating an onslaught of new deal activity as PE firms are forced to return capital or reckon with debt maturities. 

In the meantime, there’s always add-on activity to buoy origination volumes — although that too may be hindered, as regulators take a closer look at private equity roll-up strategies. 

“Private equity firms at some point will begin selling their crown jewel assets,” said the origination head we quoted earlier. “You can only sit on them for for so long.”

Gables sale attempt provides window into private credit deal slump

Owen Sanderson

Excess Spread — Sweet release, baked Danish

9fin team

Webinar Replay — Free fallin': Chapter 11 trends that defined 2025 and what's next

Sasha Padbidri

Luke Viner

The Singapore cross-class cramdown provision’s future is now

Webinar Replay — The art of the LME: defining trends in 2025, and looking ahead to what’s next

Save time, react faster to news, outperform your peers.

Asset Managers & Hedge funds

Save time, pitch more efficiently, and win business.

Investment Banks

Turbocharge your trading desk P&L, with the market's fastest news alerts.

Sales & Trading

Spot novel covenants, save time drafting and win business.

🍪 Our Cookies

Gables sale attempt provides window into private credit deal slump

Read all our public content for free

Recently Published

Excess Spread — Sweet release, baked Danish

Webinar Replay — Free fallin': Chapter 11 trends that defined 2025 and what's next

The Singapore cross-class cramdown provision’s future is now

Webinar Replay — The art of the LME: defining trends in 2025, and looking ahead to what’s next

What are you waiting for?