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The growth of private credit can be traced back to the Great Financial Crisis of 2008-2009. In particular, new guidelines from the FDIC and Federal Reserve (among other governmental agencies) made it more difficult for banks to underwrite financings that resulted in debt-to-EBITDA ratios in excess of 6.0x.
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The decisions from the court on those preliminary matters, as well as the arguments raised by legal counsel, offer some valuable lessons for sellers considering sale transactions that require debt financing, and may motivate sellers to re-evaluate certain provisions and remedies that have become customary in those transactions.
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Some of the economic predictions regarding the economic impact of the coronavirus on the economy and GDP are quite dire. To give you some perspective on how draconian these numbers are, during the Great Recession of 2008/2009, GDP dropped by 4.3%; during the Great Depression, GDP dropped by about 30%. Louis, predicts the U.S.
The European Stability Mechanism Board (ESM) operates as a financial backstop intergovernmental institution established in 2012 to combat the European sovereign debt crisis of 2009-2011 in euro member states. Example # 1 Consider a scenario where Country A, a eurozone member, faces a sudden economic downturn due to external factors.
As the world headed into the uncharted territory of a worldwide pandemic, investors in both debt and equity markets reacted to shifts and changing conditions in several interesting ways, and the lessons they learned and the actions they take this year will set the stage for everyone’s access to capital in the years to come.
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