September 23, 2022

How do you generally think about return on capital when looking at M&A – specifically with regards to the LCD acquisition can you walk us through how you thought about the price you paid for the asset, the assumptions you’re making about the business and the cash-on-cash returns you expect from the investment?

We evaluate the returns of any potential M&A transaction relative to expected returns for other uses of capital. In determining the price we pay for acquisitions, we focus on cash-on-cash returns and internal rates of return. Our acquisition planning is informed by comprehensive diligence and the value we expect to deliver through integrating acquisitions into our business. In the case of Leveraged Commentary & Data (LCD), we believe that low levels of historical investment in the business were not sufficient to realize what we see as its significant growth potential, especially given secular tailwinds for private credit. Based on our work and planning, we are confident in our ability to realize value and excess returns as we invest in the integration.

LCD datasets complement PitchBook’s robust product and research capabilities, adding comprehensive coverage of leveraged loans and high-yield debt, and growing coverage of investment-grade bond issuance, distressed debt, corporate bankruptcies, middle market transactions and CLO/fundraising. We believe that this will help drive future PitchBook growth as we are able to provide transparency into the leveraged loan market while creating a centralized tool for private capital and debt markets. 

LCD also brings more than 500 leveraged loan indexes in the U.S. and Europe and the Morningstar LSTA Leveraged Loan Index, which joins Morningstar Indexes’ expanding fixed-income capabilities. 

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