In this first 2024 installment of this quarterly ABL Advisor article series, Charlie Perer sits with commercial finance industry participants to discuss the state of the ABL industry and general market dynamics. The objective of this series is to engage with a group of commercial finance leaders who cover the spectrum of lending, turnaround advising, and capital raising to ascertain their views and how they are positioning their business for success.
Here to tell the story are Michael Panichi, SVP, Group Head of KeyBank Business Capital, Stephen Beriau, Senior Managing Director of Eclipse Business Capital, Tom Lesch, Partner of Livingstone, and Winston Mar, Partner of CR3 Partners.
Charlie Perer: Please briefly introduce yourselves.
Michael Panichi: I am the Group Head of KeyBank Business Capital. Our team provides asset-based lending solutions to middle-market and large companies nationally for a wide variety of ongoing and event-driven needs, ranging from acquisitions, dividend recapitalizations, seasonal and/or turnaround profiles. As part of KeyBank’s Debt Capital Markets Group, we have expertise in providing comprehensive solutions from simple to complex debt structures.
Tom Lesch: Thank you for the opportunity to join the panel, Charlie. I am a Partner at Livingstone Partners, where I have led our Debt Advisory practice for the past 12 years. Livingstone Partners is a global M&A and Debt Advisory firm with 100 employees across ten offices (two in the U.S., one in China, one in South Korea, and seven in Western and Northern Europe). Our M&A practice constitutes approximately 75 percent of our overall business volume, with Special Situations (Distressed M&A) and Debt Advisory comprising the remaining 25 percent. The deals we engage in fall within the $20 million to $500 million range, catering to private equity-backed and family businesses.
Stephen Beriau: I serve as a Senior Managing Director for Eclipse Business Capital, a non-bank finance company focused on providing asset-based loans between $15 and $200 million. I am responsible for sourcing and structuring new transactions in the Midwest region. I joined Eclipse as a Managing Director and Senior Underwriter in 2016 after holding underwriting, credit and field exam roles with Cole Taylor/MB Financial and Bibby Financial Services.
Winston Mar: I am a Partner at CR3 Partners based in Los Angeles. I have been in the restructuring industry for over twenty years, dealing with a wide variety of industries including advertising and marketing, energy, entertainment, computer products and services, food and agricultural products, manufacturing and restaurants. I have experience in both out-of-court and Chapter 11 proceedings and have served in a variety of senior-level positions, including CRO and CEO.
Perer: How would you describe the current market environment through the lens of your own business?
Lesch: We have seen a pickup across all three lines of business: M&A, Special Situations, and Debt. For healthy sell-side engagements we are seeing both PE and Strategics interest in the deals we are bringing to market. Seller expectations have been reset a bit, while buyers understand that being a first mover likely means they are buying at a more attractive multiple as opposed to waiting for the market to rise. Our Special Situations group has ramped up significantly since Q1 2023. We will touch on the drivers of this later in the discussion, but banks are more actively managing their workout credits, which drives opportunities for our Debt and Special Situations practices. Our pipeline of active engagements across all three business lines is robust, with several near-term deals expected to close prior to the end of Q1 2024. I should also point out we are slightly different from most investment banks we compete against in that we are much more private company-focused as opposed to relying on PE-backed deal flow.
Mar: What we are seeing, at least with regulated lenders, is more activity in terms of distressed deals and higher overall deal volume than in prior years. We are also seeing lenders that are becoming much more active in dealing with poorly performing loans. In 2023, our inbound leads from companies funded by regulated lenders were higher than in 2022 by over 35 percent.
Panichi: I would say cautiously optimistic. The anemic activity in 2023 has many financial institutions seeking increased volume for 2024. However, the theme will be targeted growth with continued focus on capital levels and liquidity, especially given the proposed regulatory changes. We are seeing evidence of a pick-up in M&A and macro-economic conditions still show signs of resiliency, albeit some weakness in certain consumer segments.
Beriau: Trending positively, we are seeing more transactions driven by restructurings and traditional refinancing activity. While the first half of 2023 was active for the number of deals reviewed, many of the transactions would require lenders to act as equity in the capital stack. These early transactions needed a complete balance sheet restructuring but were short on resources and capital.
Perer: Entering Q1 2024, where is deal flow both in terms of quality and quantity compared to this time last year?
Panichi: While deal flow picked up somewhat late in the second half of 2023, we did notice a considerable change in mix towards more challenged credits as banks seemingly sought to purge undesired relationships. Going into the tail of 2023 and into the start of 2024, we are beginning to see a shift back towards quality of opportunities, likely in part from those borrowers that sat idle in 2023. The message to the client base last year was not to ask for any additional capital unless you really needed it, given the likelihood of the need to increase pricing. For performing companies with growth opportunities, capital needs will persist through 2024.
Lesch: Deal flow is up. As many saw, Q4 was pretty active, and we are seeing both M&A and financing rebound a bit from the depths of Q2 and Q3 2023. According to LPC’s Private Deal Analysis, loan volume in Q4 was up 31 percent over Q3 and up over Q4 2022. The combination of healthy M&A getting back on track and banks proactively working out their distressed portfolio has led to increased loan volume in the middle market. While nowhere near the peaks of 2021, loan volume was up substantially in Q4 2023 over Q3.
Beriau: Improving; we saw more opportunities in 4th quarter that had either a route to restructuring or the availability needed to effectuate a successful turnaround. These businesses typically had recovering revenues or were able to completely exit product with higher landed costs, while having sufficient availability to bring in newer product.
Mar: Our firm has hired more people to compensate for the increase in work, we are relatively full in terms of capacity, and we continue to hire more people in 2024 as we anticipate additional growth in our deal flow, both in terms of the number of clients as well as the complexity of our engagements. We are also assessing what areas we could be effective in terms of deal structure to facilitate a better outcome.
Perer: Did the banking crisis of 2023 change how both banks and non-banks handle covenant breaches?
Beriau: Banks were changing how they handled covenant breaches well before the banking crisis, but it may have further shortened timelines for borrowers. We are seeing more notices of default and tighter timelines for refinancings due to the impact these credits have on capital ratios.
Lesch: The banking crisis certainly was a dose of reality for workout groups and special asset units. Banks need to manage businesses that miss covenants more actively. While it is understandable to be sympathetic to the first covenant breach, after two quarters, work-out lenders need to manage distressed credits actively; if they don’t, it is usually too late, and a refinance becomes impossible. While non-bank lenders generally have flexible underwriting standards, these groups are better at supporting good businesses with bad balance sheets, not bad businesses. Non-bank lenders cannot be expected to simply fix every bank workout credit that comes along.
Panichi: I don’t believe much has changed in terms of how a bank handles an underperforming borrower. Historically, it’s always been a function of an institution’s aggregated portfolio composition and assessment of the level of existing and potential stress in the book. What has changed is the focus on building capital and liquidity to meet newly proposed requirements. This will be another consideration as to which relationships are desired or not as well as the carrying cost of riskier loans.
Mar: Coming out of COVID-19, the OCC (Office of the Comptroller of the Currency) and other agencies issued a memorandum that allowed banks to be more lenient with respect to its loans to struggling companies. However, this relief expired in 2022 and banks became much more aggressive on covenant breaches, which we have seen through 2023 and into 2024.
Perer: Are lenders more quickly and aggressively handling workout credits?
Beriau: Yes, the impact of TDR’s (Troubled Debt Restructuring) on bank capital ratios and subsequent earnings has banks preparing to exit credits sooner. The most recent SFNet Quarterly Asset Based Lending Index shows bank Criticized and Classified Loans as a percent of Total Loans Outstanding increasing from 6.2 percent in Q2 2022 to 14.5 percent for the same period in 2023.
Lesch: They are, and they should. If they do not actively manage those borrowers, the chances of a refinance at par are significantly diminished. In 2023 it was noticed that both banks and non-banks became more active in managing credits. For banks, the insistence on putting in restructuring advisors became more common. While on the non-bank side we have seen a significant increase in lenders exercising their right to “Vote the Shares” and replace the board of directors at the borrower. Years ago, this move was almost more theoretical and rarely used; however, in today’s workout environment we are seeing it deployed with some regularity.
Panichi: There did appear to be a push in the second half of 2023 for the banking community to exit undesired relationships or risk-off undesired asset compositions, especially in segments that showed signs of weakness or term loans with little or no depository relationship. Given both the current economic environment and increased non-bank funding sources offering more aggressive structures, borrowers who do not fit a traditional bank structure have options, and a refinance can be the quickest way for a resolve for all parties.
Mar: We are seeing that lenders are getting engaged sooner. This is a positive for turnaround firms and professionals because we can do more for the company if we are engaged sooner. When companies have us come in sooner, our hope is that we can fix a company and preserve more value, instead of selling it or pursuing a liquidation if we are brought in too late.
Perer: Please compare and contrast the 2021 credit environment to 2023?
Panichi: The credit environment of 2021 versus 2023 were vastly different. In 2021, banks were trying to sift through lots of noise. Quantitative Easing, including direct checks and PPP funds propped up both consumers and businesses, respectively. Banks were focused on core earnings and risk that PPP funds were a temporary fix or masking other problems. Supply chain disruptions were also prevalent, and in many cases causing sales disruption. This led to excess inventory supplies in 2022, at higher costs, as business overcompensated to ensure continuity of sales and production. What became more apparent entering 2023 was a demand shift, especially in the consumer as they pivoted to services at the expense of household/discretionary goods. In 2023, destocking and inventory values and reliance on those assets in the borrowing base became a focal point, as did imbedded losses and the impact to earnings given deflation from prior transitory spikes.
Lesch: Basically it’s night and day. 2021 was one of the best years for M&A and debt, while 2023 was bleak, with M&A and debt issuance levels down considerably. LPC cited middle market loan volume in 2023 was down 33 percent from the peak of 2021. In 2021 M&A multiples were coming out of Covid and exploded, which led to debt multiples increasing. With debt volume up and interest rates low, deal structures also got pushed with borrower friendly accommodations throughout credit agreements. In 2023, in a higher rate environment, and with M&A volume significantly curtailed, lenders brought leverage down and significantly increased the strength of the credit agreements.
Beriau: In 2021 companies were able to buy time with their lenders because of federal monetary support and relaxed bank regulation for downgrades. With the end of federal support in 2023 we saw a step towards the more typical credit cycle for borrowers of steady state, contraction, operational improvement and expansion.
Mar: One of the unintended consequences of monies being distributed through PPP and similar programs through 2021 was that it gave companies breathing room to avoid dealing with many of their underlying operational and management issues, in addition to pushing off their lenders. Now, we are seeing lenders having more freedom to decide if they truly want to work out underperforming credits or force the borrower to refinance.
Perer: How do any of the lessons learned over the past few years inform your decision making starting 2024?
Panichi: Each market disruption has some level of uniqueness and provides insights on how to better manage risk prospectively. For instance, supply chain issues heightened awareness on alternative vendor sourcing as well as carrier and route options. The pivot in demand in certain segments also warrants greater reflection on watching for bubbles and trying to stay ahead of the cycle or boxing in risk earlier to ensure a soft landing.
Lesch: As we saw both M&A and Debt rebound a bit in Q4 2023, I predict Q1 and Q2 will continue with this momentum. So, while lenders likely have changed some habits, namely more actively managing workout credits, I think you are going to see a strong market on the new issuance side.. Lenders will compete to win mandates, pushing spreads down and looser structures. In many ways it’s a tale of two markets with banks migrating to only booking strong new credits and managing how to exit marginal deals.
Mar: We prefer to start cases before the company is entirely distressed and is unable to make payroll. We are starting to see banks agitating for change in anticipation of covenant defaults, as opposed to in prior years in which banks would wait for financial defaults to occur before taking action.
Beriau: 2023 further proved EBC’s mission that our pre-proposal diligence process is important because it ensures a comprehensive structure that works for the client and provides certainty for our intermediaries. No facility is one size fits all and waiting until due diligence to finalize structure is detrimental to all stakeholders.
Perer: Do you anticipate more new deal activity from the sponsor universe or bank transitions or exits?
Lesch: Several larger middle-market sponsors recently closed on multi-billion dollar fundraises. This dry powder, coupled with existing equity that was on the sidelines during 2023, should make for robust auctions where price and speed will be the recipe for winning a sale process. When purchase price multiples increase, leverage undoubtedly increases. As mentioned above, workout lenders are more actively managing troubled credits, so the distressed workout volume should also be up. Our Special Situations Partner, Joe Greenwood, has been tremendously active over the past 12 months. Together, Joe and I expect a fair amount of lending activity for distressed workout exits. I also anticipate a fair amount of deal flow from add-on acquisitions. So, for my line of business, both the healthy and distressed sides are expected to be strong this year.
Beriau: Exits, while we have many sponsor-owned companies in our portfolio, almost all of those transactions were driven by changes in credit profile. M&A activity was down significantly in 2023 and I do not expect a rebound in 2024.
Mar: Our firm has historically had an above-average proportion of deal flow from equity sponsors, as we have several colleagues with operational-restructuring and performance-improvement skill sets in addition to financial restructuring. We are speaking to more sponsors in terms of their situations and how they can improve them, but the plurality of our incoming leads and eventual clients comes from secured lenders, although those clients are themselves for the most part sponsor-backed or otherwise closely held. We are also seeing more work from banks who want to exit credits.
Panichi: There definitely is an expectation of increased sponsor activity. It is more likely this year that buyers and sellers will find a new value equilibrium, spurring M&A. Growth should also be precipitated simply by maturing funds, which will force sponsors to monetize existing portfolios and raise capital to deploy for new opportunities. To the extent we do see some relief in cost of funds, this will also contribute to an increase in activity. Roughly 20 percent of our relationships are sponsor driven, so we have strong familiarity with this investor group.
Perer: Have banks finally shifted to a risk-off mode that should benefit the ABL market?
Beriau: While there were a few banks focusing on protecting capital in 2023 either due to acquisitions or the regional banking crisis, the entire market has not shifted to risk off. I’ve seen numerous transactions closing with regional and national banking institutions that were arguably borderline credits, because they were well capitalized during the regional crisis, and ABL is one of their key product offerings.
Panichi: There is no shortage of private credit continuing to enter the market as secured lenders or otherwise. In 2023, we saw banks focus on de-risking either aggressive structures or specific assets through the non-bank lenders. The expectation is for this to continue into 2024, but at the same time allowing for funds to be reconstituted to more desired relationships, certainly with a continued focus on depository relationships and ancillary business.
Mar: No, banks are still taking some risks. In terms of the ABL market, they still want to work with companies, contingent upon whether the companies can return to a situation where the business is running properly.
Lesch: I have noticed banks have pulled back on ABL. Ten years ago, the bank-led ABL environment was extremely aggressive. Over the past year, commercial bank ABL groups have become less aggressive and retreated to more conventional structures. Banks doing significant air balls and aggressive stretch pieces are few and far between in today’s market.
Perer: Is there enough supply to meet the pent-up finco demand, especially given there are more new entrants?
Beriau: No, and I am seeing lighter covenant packages and looser structure to gain share. It could be argued that since pricing is not the sole factor, some entrants might be filling a previously underbanked portion of the market with higher yielding structures.
Lesch: Yes, there should be, but these groups must quickly realize that clubbing up a deal might be the way to win. Some newer entrants have smaller hold sizes; therefore, holding $30 million+ might be difficult, but if they begin to work together on a $50 million bank workout credit, two groups could easily take it down together. The trick here is finding a group with a similar capital structure and risk culture so that both groups are in lockstep with how to underwrite and manage the credit. The last thing they need is to work with a group that doesn’t share their same vision; nobody wins in that type of arranged marriage.
Panichi: From what I see from our capital markets team, not at this point for quality of opportunities. For certain profiles, larger structures, you are seeing some price tightening given the competitive landscape and limited supply. In the middle market arena, you see a re-evaluation of risk and reward, with some attempt to differentiate through more aggressive structures, while others would rather deploy capital on tighter margins with less perceived risk.
Mar: In years past, we have been able to refinance banks very easily. Now, there must be a plan in place and the company does not have the ability to be in bad shape. The pricing is higher for private credit who are looking at more of the credits, although in some cases the private credit firms end up underpricing their risk in an attempt to compete with traditional lenders with lower borrowing costs.
Perer: What are the lasting effects from the regional banking crises?
Panichi: Risk management will continue to focus on liquidity and duration risk as well as face increased regulatory oversight. Further, the proposed capital requirements will undoubtedly impact the cost of borrowing. The regionals are focused on building capital and so will be mindful of the pace of growth, dictated by liquidity and targeted return on equity as they seek to build capital.
Lesch: Again, we certainly hope lenders now understand how precious capital is and that ignoring a problem credit isn’t a winning solution. Taking a loss on a credit due to inaction is a surefire way to sink a bank. Banks have made this shift, and we anticipate their more proactive management style will be here to stay.
Beriau: In the medium-term regional banks will have an increased focus on deposits and watch list credits in order to manage capital ratios. This may create an opening for fincos to refinance bank customers with heavy utilization, tight liquidity and limited deposits that would have previously remained banked.
Mar: The regional banks will have a challenging time with office real estate in addition to the significant issue of commercial real estate.
Perer: Where are we in this market cycle?
Panichi: Likely late in the cycle, although we all keep pushing out the chance of a recession each year. There are certainly mixed performance results and it’s plausible that we may see more of an asymmetrical cycle where some segments continue to soften while others do not. You have monetary tightening at the same time as fiscal stimulus. Infrastructure spending has not really been deployed yet and consumers continue to show some signs of resilience, likely given real wage growth that has occurred recently. We are seeing pockets of consumer discretionary goods struggling, but travel and leisure continues to perform. Volumes are off highs in commodities but stable. Even if we do get a technical recession, I don’t think anyone is seeing a 2008 situation. The banks are healthy, and many businesses do have muscle memory with management teams more adept at reacting more quickly to the environment, though higher rates for longer will eventually take its toll on the economy.
Beriau: Because the U.S. consumer has been resilient it feels like middle innings and if all else remains equal for import expenses and wages, I expect we will see 3 more years of expansion. This timeline would change quickly if increased container rates or tariff uncertainty occurred for the second time in an 8-year period.
Mar: Every time my partners and I attend a panel at a conference on the state of the market, all the panelists have different views. Many banks are doing fine and are trying to get rid of credits that are not performing well. Commercial real estate will be an issue, as discussed earlier. I do believe there will not be a severe recession with no extreme issues with the markets, but one of the features of being a middle-market focused firm is that management teams are weaker and less nimble than at larger companies and therefore less able to handle distress, irrespective of where the market goes. This market cycle will be like what we have already seen: poorly managed companies will have issues and the well managed companies will be fine.
Lesch: In a tight labor market coupled with higher interest rates, we continue to see pockets where businesses struggle. So, while we expect the M&A markets will continue the momentum from Q4, we still see a fair amount of activity in the distressed market. Overall, 2024 will be a very active year across M&A, Special Situations, and Debt Advisory.
Perer: What are the primary market drivers your team focuses on the most?
Mar: The market drivers for distressed companies are a plethora of deals done in the last five years that were initially leveraged with a TEV multiple of more than 10x or 12x. These deals are coming into workouts now because there is no more money left in the private equity firms’ funds that invested in the deal and the company has not grown into the capital structure, thus becoming distressed. We have seen many of these deals in 2023 and expect to continue seeing more of them in 2024.
Beriau: Given that the finco market is mainly driven by the transfer of credits from banks, EBC focuses on how our product can differentiate itself from the regulated market so that we can improve the customers experience in the initial refinancing and keep successful clients for years after.
Panichi: Portfolio management definitely is a focus with consideration as to the cycle of a particular segment and our existing exposure. However, not much trumps good management teams and a company with strong reporting capabilities, which assists in visibility and decisioning. We are a relationship bank focused on businesses that have a reason to exist and a vision for continuity.
Lesch: Our Debt Advisory and Special Situations practices are industry agnostic, so we don’t track market drivers like oil rig counts or auto builds as indicators. However, the higher interest rate environment coupled with the tight labor supply certainly has increased activity for both of our practice groups.
Perer: Do you face more competition from banks or non-banks?
Panichi: Seems like it’s everywhere in the current environment. Last year, anecdotally, a large portion of the banking sector backed away from aggressive pricing and structures to win a deal, likely given the aftermath of bank failures and focus on capital and liquidity. Given a need to re-deploy funds, this may not be the same in 2024. Non-banks are increasingly playing a larger role in secured financial transactions. However, as they continue to grow, we are also seeing increased attention from regulators and concerns over systemic risk.
Beriau: Non-banks. As more of our peers recapitalize there is more pressure to grow and credit structure follows. Almost all of the finco lenders have been started or purchased by hedge funds/private equity and they have expectations.
Lesch: We are seeing commercial banks pull back a bit in the ABL space. This has allowed the non-bank ABL players to step in and fill the void. I think credit quality at non-bank ABL portfolios has improved in this environment, as they do not have to stretch as far now that banks are more disciplined.
Mar: Although as financial advisors we do not compete with banks or non-banks, private lenders have made most of the loans to middle-market private equity. From a turnaround perspective, we are seeing a significant increase in deal flow from that sector as opposed to the regulated sector, although the regulated sector continues to dominate.
Perer: How busy is the turnaround consulting industry given it’s a leading indicator or future ABL deal flow?
Mar: Currently, our industry is very busy, and our firm is no exception. It is a leading indicator of more ABL deal flow or more deal flow to the private-credit firms. Our firm is currently at over 50 professionals, most of us are fully utilized, our engagements deal with more complex financial and operational issues as well as larger bank groups, and we continue to hire this year in anticipation of these trends continuing.
Beriau: It certainly seems like most consultants are quite busy. Telling signs include the 21 percent increase in commercial bankruptcy filings year over year during January and Fitch Ratings’ notification in February that Large Middle Market issuers within Fitch’s leveraged loan universe reached 5.5 percent for 2023, the highest rate within Fitch’s data going back to 2007.
Panichi: The industry saw an uptick in criticized loans in 2023, but portfolios are coming from a position of strong credit quality in general. Consultants have gotten busier as well, but in pockets. For example, the healthcare segment and inventory issues were two themes from the aftermath of Covid. Overall, though, the speed of doing business seems to be separating good management teams from those who are less prepared. Consultants are out pitching operational improvement, not just crisis management. An ABL structure can offer flexibility in turnaround situations, but we would look to the root cause and if that has been rectified and ability to develop a long-term relationship.
Lesch: We currently have the same turnaround group on two deals we are working on, if that is any indication. This goes back to banks more actively managing distressed credits and mandating a turnaround consultant to be on the ground to help protect the bank’s position.
Perer: How does the prospect of a multi-year, higher interest rate environment affect your business?
Panichi: We have seen some impact from higher for longer on those businesses that have both high financial and operational leverage as debt service consumes more free cash flow. This has been more impactful on businesses that are still finding a new equilibrium of sales to inventory levels. Rates have also impacted deal flow. M&A and dividend recapitalizations have been good drivers of business, both of which were dramatically down in 2023.
Mar: It is significant because most companies are accustomed to interest rates in the 2 to3 percent range. Now, it is in the 8to 9 percent range, which means a higher percentage of their free cash flow goes toward paying interest as opposed to investing in improvements to the company. Given the higher interest rate, if a company maintains the same level of EBITDA, that will be problematic.
Beriau: Higher interest rates will likely lead to further opportunities across the middle market as bank covenants will be harder to maintain during periods of business transformation. On the other side of that coin is increased competition as private credit groups search for yield while needing to put funds to work.
Perer: What is a perception you have about today’s ABL market that is not widely shared?
Beriau: This may not be a narrow belief, but I believe that we will not see another CIT/GE sized finco until a group can solve the capital and waterfall issues caused by offering a true one stop unitranche solution, while using bank leverage. Maybe loss pools can fill a gap, but there aren’t enough bank lender finance groups out there to support a $5+ billion portfolio.
Lesch: The banks have finally pulled back. Due to competition, commercial banks had historically been very aggressive in winning new mandates. This led to various accommodations, lending on foreign collateral, stretch pieces, and over advances, to name a few. Banks have pulled back from that type of lending and are instead using more of ABL 101 approach to structuring deals. The bank consolidation certainly played a role in changing the lending environment. Still, the other driver of the bank’s conservatism was the banking crisis. But while structures are tighter, it’s still a competitive environment; therefore, on stronger credits that fit nicely within an ABL box, commercial banks compete with price, and strong borrowers get deals done below a S+ 1.75 adder..
Mar: The role that ABL working capital lenders is to be the canary in the coal mine for highly leveraged deals with large term debt. I believe lenders have a role in managing the key indicators in a loan for the entire capital structure. ABL lenders tend to understand the business and collateral better than other banks in the capital structure.
Panichi: I can’t say that I have a perception that may be outside of the consensus today. However, I believe the field will change over the next decade with the advent of technology and expansion of non-bank business models that focus on secured debt market. Think of some of the non-bank platforms that exist today and have expanded vertical and horizontal services provided – appraisals, investing, liquidating. Software will be a catalyzer for transactional tying, and by that I am referring to the life of an asset. Understanding asset values in real-time has vastly improved as buyers and sellers globally are better matched today than a decade ago and the use of blockchain will only increase the speed and accuracy of certain transactions and reduce costs in the process. As markets become more efficient, it reduces the element of arbitrage. This will be interesting as to how it plays out and with whom.
This article first appeared on ABL Advisor: https://www.abladvisor.com/articles/38150/abl-industry-state-of-the-union-q1-2024