About Trudeau & Trudeau

 

Trudeau & Trudeau Associates, Inc (T&T) is a full service M&A advisory firm that provides merger and acquisition, corporate finance and strategic consulting services to client companies and private equity groups. Since its founding in 1982 by the Trudeau brothers, the firms philosophy has been to bring an organized and systematic approach to executing complex merger and acquisition transactions for their clients. After 25 years, the Trudeau brothers are still active partners providing their clients and colleagues with the experience of having successfully completed hundreds of transactions.

 
 

Toggle Notes Boost Buyout Boom!

By John Parnell

"Pay me now or Pay me later". I seem to remember that tag line from an old Oil Filter Commercial.

As the historic buyout boom continues, Payment in Kind (PIK), Toggle Notes have become a more recent, innovative tool of Private Equity.  As we see corporate default rate at record lows of less than 1%, the issuance of this type of debt has allowed Private Equity to:

  • Pay more aggressive prices for deals
  • Provide their portfolio companies liquidity during slow periods
  • Make available bond interest deferment payment options 
  • Instill added flexibility into the deal � guarding against default

These "PIK Toggle" securities have enabled companies with strained cash flows to stay afloat longer by putting off these interest payments.  However, this deferment does not come cheaply.  The interest rates may increase by as much as 3/4 to a full point when the bond matures.  Conversely, the high interest rates attached to the Toggle Note deferment has provided incentive to stay on schedule with interest payments unless times take a downturn.

The recent inclusion of this type of debt structuring reinforces our feeling that it is still a sellers market and will be for some time to come.  Private Equity knows it and is willing to pay for it. 

The PIK Toggle notes have provided easy lending terms, the availability of cheap debt, and �covenant friendly� loans for Private Equity.

The bull market in debt is now being fueled by the reemergence of the PIK Toggle Note.  For the seller this translates to more aggressive buyers, higher multiples, and greater flexibility.  With over 25 years of maximizing the shareholder�s return through our proprietary process, Trudeau & Trudeau is strategically well positioned to capitalize on current market conditions and secure maximum value for you, your family, and your organization. 

Please call any of the team members listed below to begin harvesting the fruits of your labor.

John Parnell

339-469-8903

jparnell@trudeau-trudeau.com