There is a lot of dry powder in the middle market as indicated in the graph below. Our gauge of the supply of capital shows about $800 billion in dry powder available for the middle market.
This is the difference between closed deal value and the purchasing power of new equity funds raised. We measure purchasing power of new equity funds by dividing yearly new funds raised by 40% – an approximation of the equity investment into each deal. This gives you the amount of value that the new equity funds can purchase assuming loans represent 60% of the value structure.
So unlike 2008 when the market buckled, the current middle market is likely to be strong for the foreseeable future due to the sheer amount of dry powder available for investment.