ACAS -- a few clippings from here:
seekingalpha.com
The other thing I think very important as you look at quality portfolio companies just look at the average EBITDA margins. And since the last cycle we have been investing in companies that have 20% plus average EBITDA margins versus in the last year going into 2001 we were in high single digits or somewhere between 8% and 11% EBITDA margins. That is an important factor to look at when you are assessing multiples and assessing comparative companies and you want to understand really where is the quality of the portfolio.
You know one thing I must say, we know that there is for years been this belief by some that we could not operate in a steady state environment, despite all, we would do our best to refuse that and why that's just simply not true and we have shown scenarios and numbers and everything else and yet that still lingers as a concern. And so we are not going to be a... we don't have our finger on the trigger to raise capital. We do believe there is tremendous opportunities right now, you saw... I am sure my quote in the earnings release were conveying that we are seeing some of the finest opportunities I have ever seen and it would be fantastic to have the capital to go after all of the very best of.
Well keep it that's the other point. If you look at our... the degree to which we throwaway deals, we have, I think undisputedly, the largest deal stream in the world, in middle markets in the United States and North America. We have perhaps the second or third largest in Europe, but in the United States we have the largest and it is by far and the reason we have that large deal stream so we can throw away the 98%, 99% of what we see, and skip... and only pick the best ones, since we are the biggest firm out there with the greatest capability that we can fund in dollars, sterling and in Euros and in Canadian dollars. We can do due diligence in North America and in Europe. We can do outsourcing in China because of all these features we get the best deals. We guess we are able to cherry pick the very best out there.
We tend to get the first call and because of our one stop buyouts we get the first call and we get the last call. If the deal starts to cater for some other buyer, we get the next call. We get the cream of the crop and that was not true when we were a younger firm, six to seven years ago. But it is very much the case today. We have noticed that a lot of analysts don't... just do not give us much credit for being vastly bigger than most BDCs out there. But the typical BDC is the tiny little finance company. They... this is the tough stuff and this has been a very tough environment sort of... for the tiny little finance company. And for us, this is a great environment for us. We get the cream of the crop.
So, we're not seeing a recession, but nonetheless, we're assuming it's going to happen. And therefore, we're prepared to operate in a steady state mode, and that means we're prepared to operate without raising capital at American Capital in '08.
Now, we do expect to generate significant internal liquidity that will be available for new investments and we think that amount of liquidity will exceed the capital base of virtually all of the competitors that we compete with. So, with a portfolio of the size of ours and with as much liquidity and control that we have, we expect lots of liquidity to invest in new companies, wider spreads and with less competition. |
