Economic News/ Commercial Awareness/ Industry

Question 1

Tightening of lending standards

Answer 1

Banks have had to tighten their lending which means private credit is on rise, especially after GFC and banks have to hold large amounts of capital and follow strict rules

Question 2

What interests you about current affairs?

Question 3

Describe what challenges have influenced financial markets in recent months and how they might affect our clients.

Answer 3

• Inflationary pressures
• Cost of debt
• Fundraising for PE
• Protectionist stance on M&A (regulatory concerns)

Question 4

What’s going on with bond yields? Why are they rising?

Answer 4

• US debt downgrade inserts additional risk premium - this is due to debt mismanagement and having near misses with the debt ceiling
  -China is defending its currency purchasing US treasury

Question 5

M&A Trends

Answer 5

• Large caps pursuing acquisitions with capital not being an issue for the companies
  -Valuations in biotech has come down making it easier for large caps to pay the kind of premiums
• BUILDING SCALE and Need to accelerate top-line growth and market awards those that are excelling
  -Private sponsors driving unlevered returns through growth rather than financial engineering
• Less competition from IPOS for private companies
  -Activist shareholders rise as equity valuations fall
  -Stronger dollar pushes for UK takeovers

Question 6

Key deal drivers

Answer 6

• Generative AI, energy transition, deglobalisation and cybersecuity
• Drugmakers pursuit of new treatments for rare diseases