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Have You Read Your Loan Docs Lately?

A recent study by a well-respected insurance investment banking firm reported that merger and acquisition activity was off some 40 percent in 2009.

By Robert J. Pettinicchi | Updated on March 31, 2010

A recent study by a well-respected insurance investment banking firm reported that merger and acquisition activity was off some 40 percent in 2009. Among the reasons cited beyond economic uncertainty and fear of national healthcare were jittery banks and lack of access to capital.

It’s no surprise that banks have all but stopped lending unless the borrower is of such low risk that even a bank examiner would have recommended the loan. The credit crunch is far from over and a hard market for leveraged lending will persist for the foreseeable future. Loans to agencies always have fallen under the broad definition of “leveraged finance”–cash-flow based loans that are not supported by hard asset values or balance sheet equity and reflect intangible factors such as “enterprise value.”

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