A rising economy and the increased availability of financing continue to give middle market company founders, and their private equity partners, reason to sell their companies and take advantage of high exit multiples. Lenders and banks are eager to provide financing structures to make those deals come to fruition. These are some of the observations expressed by Tom Hobbis, Co-Head and Managing Director of CIT Sponsor Finance.

1. 1© 2015 CIT Group Inc
What’s hot in private equity today?
The private equity market is really benefiting from the availability of
capital. There are a multitude of lenders and banks that are providing very
aggressive financing structures. As the economy continues to improve, we’re
seeing more companies grow and mature to the point that their owners are
willing to consider a sale. Private equity firms that own businesses now are
trying to sell them to take advantage of the very high exit multiples that are
being driven in part by the availability of financing.
What factors are moving deals?
Today there are three factors to consider for moving a deal. Number one,
because the market is so aggressive right now, having the right offer price
to buy is very important. Number two, if you can have financing arranged
beforehand, that will really help to bid aggressively, which will in turn
improve your chances of winning a transaction. Number three, having as few
contingencies as possible is very important.
Why should middle market companies partner with a private
equity firm?
There are lots of reason to partner with a private equity firm. Perhaps the
most important, and we see this a lot in the middle market where our clients
specialize, is that a lot of the companies that our clients buy are either family
owned or founder owned. When they’re selling their businesses or they grow
their businesses to a certain size, they need help. They need expertise and
they need capital, and private equity firms specialize in that. Private equity
firms are very good at helping businesses grow further.
Many family owned businesses often reinvest in their business alongside the
private equity owner. They’re able to participate and help the company grow
to the next level and profit again when the company is eventually sold.
What impact do private equity firms have on the U.S.
economy?
Most people don’t realize how prevalent private equity is in our lives. There
are over 3,300 private equity firms in the United States. They own over
11,000 businesses that employ over 7.5 million people. Private equity firms
are invested in by institutional investors, such as insurance companies
and pension funds, so your average policeman or fireman may not realize
it but a lot of their retirement earnings are coming from private equity
Q&ACIT Executive Insights Video
Private Equity Gearing Up for Exits
Tom Hobbis
Co-Head and
Managing Director of
CIT Sponsor Finance
“Most people don’t
realize how prevalent
private equity is in our
lives.”
“Private equity firms are
very good at helping
businesses grow
further.”
Edited Transcript View video: cit.com/hobbis

2. 2© 2015 CIT Group Inc.
CIT Executive Insights with Tom Hobbis
Private Equity Gearing Up For Exits
owned businesses. Private equity firms are a very important part of the U.S.
economy, particularly in the middle market.
What forms of financing are attractive?
There are several financing options available that can be almost perfectly
tailored to the individual needs of private equity firms. One that’s particularly
prevalent this year is a structure called unitranche financing.
These structures are somewhat conservative in that they don’t have as much
leverage as you might see in a typical buyout and pricing is a little bit lower.
The lenders are happy because there’s less leverage and the borrowers are
happy because pricing is lower. In the market such as the one we have now,
where things are generally very aggressive, the all-in leverage available from
a unitranch deal might be the same as what might previously have been
available in the less-aggressive market four years ago.
What’s the outlook for 2015?
We think the economy will continue to improve in 2015. We’ll see businesses
getting stronger and healthier and eventually becoming ready to go to
market. It’s a great market to be a seller in; it’s a tough market to be a buyer.
The availability of financing and the structures that are out there are causing
prices to rise. I think it could be very hard for private equity firms to be able
to sell their companies five years from now at multiples that are higher than
they are today.
“Private equity firms are
a very important part
of the U.S. economy,
particularly in the
middle market.”
“There are a multitude
of financing options
available almost
perfectly tailored to
the individual needs of
private equity firms.”
March 2015
Executive Biography:
Thomas (Tom) Hobbis is Co-Head and Managing Director of CIT Sponsor Finance. CIT
Sponsor Finance provides cash flow and asset-based senior debt for private equity-backed
transactions in the middle market throughout the United States and Canada. Hobbis has
nearly 25 years of experience in the finance sector. He holds an MBA in international finance
from Fordham University and a BA from Gettysburg College.
To learn more about CIT Sponsor Finance, visit cit.com/sponsorfinance. Members of the press
who have an interest in speaking with Mr. Hobbis can contact Curt Ritter at Curt.Ritter@cit.
com or Matt Klein at Matt.Klein@cit.com. Additional CIT Executive Insights can be found at
cit.com/ExecutiveInsights.