Small Business Confidence

2017 was a record setting year for small business confidence according to the NFIB Index of Small Business Optimism. The average index for the year was 104.8 which is an all-time high, breaking the 2004 level of 104.6. The index has increased dramatically over the last 2 years, as can be seen in the graph. The index has increased from 95.2 as of December 2015 to 104.9 as of December 2017, an increase of 10.2%.

In the acquisition financing arena, capital availability is destiny as companies require reliable access to capital to grow over the long term. Unforeseen capital needs usually arise when acquirers least expect it. This can cause some concern for the acquisition financing provider, especially when covenants tighten up and that working capital availability is utilized faster than expected.

Mezzanine debt borrowing is usually a straightforward activity that many companies use for funding of transitional growth. Mezzanine debt lenders are highly transparent about their due diligence approach and their post-closing loan management making it easy for companies to engage with.

Elections have consequences and positive ones at that for the acquisition financing middle market. While much media attention is paid to the direction of the yield curve and the Fed’s likely rate cuts, scant attention is paid to the more important drivers of the acquisition financing market – business psychology and regulatory climate.

Small Business Confidence is Sustainably High

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