Andrew Milgram

It tends to be self-referential.

It's inferred, but there's not a great data set that gives us a good insight into a broad section of the U.S.

middle market.

A good friend of mine ran a company called Rapid Ratings.

Rapid Ratings does credit counterparty risk assessment for the Fortune 500.

So they'll assess the supply chains, the vendor relationships, trade relationships of large companies.

They rate their vendor relationships and other supply relationships and create a financial health score that then that Fortune 500 company uses to determine terms of trade and how they're going to deal with that supplier or trade counterparty.

We worked with them taking that anonymized data and winnowing it down to the US middle market.

And for us, that's companies between 100 and 750 million of total enterprise value.

And we said, okay, let's strip out everything that isn't a US company with those characteristics.

We were left with a data set of just over 1200 companies.

We've been looking at this data now for several years.

We measured it pre-COVID period and then over the past three or four years.

In those three or four years post-COVID, what we've seen is a real decline in the earnings power in the US middle market.

Now, we look at a lot of factors.

We look at EBITDA.

We look at margins.

We're looking at pure cash flow.

We're looking at leverage and liabilities.

And importantly, we focus on interest coverage because at the end of the day, companies can remain insolvent for a long time.