SFNet is pleased to present the SFNet Market Pulse, a periodic report that informs lenders about emerging economic trends likely to affect secured lending and their borrowers’ industries over the next one to two quarters. 

There have been many changes to the middle-market ABL industry over the past decade, but none more seminal than the dramatic shift in underwriting methodology to include enterprise value. But what about the assets?  Liquidating middle-market businesses with at least ABL net funds employed of $10+ million, and majority much higher, can be a difficult task. Specifically, when dealing with heavy-inventory situations as well as loans against non-working capital assets, such as M&E, RE and IP.  It constrains internal resources, has serious risk of not returning capital and is not the preferred path to go vs. running a sale process.  ABLs understand the risks and have had to adjust underwriting to factor in enterprise value as part of determining whether to get aggressive or even propose.