
ANTARES COMPASS REPORT 2021
A unique, triangulated perspective on the middle market from our portfolio companies, private equity sponsors and loan investors.
sponsor confidence
investor confidence
borrower confidence
of sponsors see as unlikely
of investors see as unlikely
of borrowers see as unlikely
of sponsors are confident in the global economy
of investors are confident in the global economy
of sponsors expect more LBO activity
of sponsors expect flat LBO activity
of sponsors expect less LBO activity
of Add Ons are seen as more active
of Add Ons are seen as less flat
of Add Ons are seen as less active
Yes, significant increase |
Yes, modest increase |
No or few inquiries |
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ESG | |||
Policy |
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KPIs |
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Diversity within: | |||
Management |
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Board |
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On ESG, almost 90% have seen at least some increased focus by LP's on policy and almost half have seen a significant increase. 80% see at least some increased focus on ESG KPIs and about one-third have seen a significant increase.
On diversity, 73% see at least modest increase in LP interest in diversity within the MANAGEMENT team of portfolio companies and about two-thirds see at least modest increase in LP interest in diversity within the BOARD OF DIRECTORS of portfolio companies.
Loan structure/channel used to finance your deals |
% of total deal count last 12 months |
% of total deal count next 12 months |
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Unitranche |
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Club Deal |
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Syndicated |
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34% selected some region for expansion, and 66% said no expansion. This was down modestly from 40% looking to expand in last year's survey.
Infrastructure spending
Environmental / clean energy investment
Stimulus / relief and low rates to boost consumer spending
Increased access to healthcare
Higher taxes (corporate, capital gains, carried interest, interest deductibility)
Increased regulation and related costs
Wage inflation
Most respondents (65%) do not expect to shift their asset allocation mix in 2021.
A shift towards more middle market exposure vs. prior reading, although sample size was small for this answer (so could be off).
Almost 70% have a formal or informal ESG policy and related KPI metric requirements around deploying capital, with another 5-11% planning to have a policy and metrics.
37% have a formal or informal POLICY related to deploying capital into funds or deals with regard to diversity within the management and within the board of directors of the target investment, with an additional 11% planning to develop such a policy. However, a plurality of respondents (42%) do not see this as an area of focus.
63% of investors claim they always consider ESG in their DUE DILIGENCE while 11% often do and 16% sometimes do.
A lesser 32% of investors claim they always consider ESG in their HOLD SIZE size while 11% often do and 21% sometimes do.
Revenue | EBITDA | |||
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Above | Missed | Above | Missed | |
2021 |
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2020 |
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2019 |
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2018 |
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Distributor | Manuf. | Service Provider |
2021 TOTAL |
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REVENUE | ||||
Flat (-2% < 2%) |
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Recovery from decline |
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Moderate growth (3% < 5%) |
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Strong growth (> 5%) |
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EBITDA | ||||
Flat (-2% < 2%) |
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Recovery from decline |
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Moderate growth (3% < 5%) |
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Strong growth (> 5%) |
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Over 0% growth | Over 5% growth | |
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Actual 2020 |
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Anticipated 2021 |
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Flat | High- Mod |
Decline | |
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2021 |
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2020 |
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2019 |
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2018 |
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ECF Spend | Distributor | Manuf. | Service Provider | 2021 TOTAL |
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Acquisitions |
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Capital Equipment |
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Hiring Employees |
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Sales & Marketing |
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Digital Expansion |
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IT |
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For internal challenges, "adding new customers, expanding into new markets" remains at #1 across business models. However, challenges otherwise show some variance across business models with hiring/talent acquisition #2 on the list for service providers vs. supply chain management at #2 for manufacturers, and bringing a new product or service to market and acquisition integration being tied for #2 for distributors.
For external challenges, competition ranks at #1 for distributors and service providers as it has in prior years; however "supplier power / raw material prices" and "supply chain management" have jumped to the top of the list for manufacturers, suggesting fallout lingers from the Coronavirus on supply chains, with raw material inflation an increased concern.
The top 5 internal challenges in 2021 remain the same compared to last year's survey with "adding new customers" at #1 across business models.
The top anticipated external challenges over the next year include competition, Covid-related restrictions/regulation, industry headwinds, supply chain management and rising costs. Geopolitical events fell vs. last year's reading.
Survey was completed early-February 2021 and is based on responses from more than 160 private equity sponsors, middle-market borrowers and loan investors. The information in this report is for informational purposes only, is current as of the date noted and should not be used or taken as finance, legal or other advice.
The information presented should not be deemed as a recommendation to purchase or sell any securities or investments mentioned. Although Antares Capital LP believes that the information contained herein has been obtained from sources believed to be reliable, Antares Capital LP does not guarantee its accuracy and it may be incomplete or condensed. Nothing within this publication should be deemed to be a research report. Past performance is not indicative of future results.