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U.S. Middle Market Performance Remains Strong, Defying Consensus

Private Equity Backed Companies Exceed Performance Expectations

The Golub Capital Altman Index can provide early insight into financial performance of public companies and GDP in advance of earnings season.


NEW YORK, January 9, 2024 – Middle market private companies in the Golub Capital Altman Index grew earnings by 16% during the first two months of the fourth quarter of 2023, the highest year-over-year earnings growth since Q2 of 2021. Revenue grew 7% during the same period.

Lawrence E. Golub, CEO of Golub Capital, said, “We expected to see strong growth in Q4 2023 and the data exceeded even our expectations. As we said throughout 2023, private equity-owned middle market companies in general are proving resilient and adapting well to the environment. Our middle market report has also performed well. Every quarter in 2023, our data provided consistently correct early insight that economic growth was exceeding the prevailing consensus. The strong revenue and earnings growth of the Golub Capital Altman Index in Q4 2023, in our view, caps off a year that bodes well for investors in private equity. Despite concern about the potential impact of high interest rates and economic uncertainty on the returns of recent private equity fund vintages, fundamental earnings growth gives investors a reason for cautious optimism.”

Dr. Edward I. Altman said, “The Golub Capital Altman Index for Q4 2023 shows that the middle market is in robust shape. Quarterly EBITDA growth of 16.3% year-over-year was the highest in the eight-year history of the Index, apart from the anomalous rebound from 2020 Covid shutdowns in Q2 2021. While Index results were strong across all subsectors, technology continued to outperform. The latest employment data shows that the labor market remains tight, and small- to medium-sized businesses face ongoing shortages of skilled labor. It is not surprising that mission-critical providers of productivity-enhancing enterprise software would benefit from these trends. Our middle market firm indexes, especially the growth rate of aggregate and sectoral EBITDA, have proven to be excellent predictors of overall GDP and larger firm growth in 2023 and we expect these indexes of primarily private equity-owned firms, diversified across several industrial sectors, bodes well for 2024.”

The Golub Capital Altman Index (“GCAI”), which is produced by Golub Capital in collaboration with credit expert Dr. Edward I. Altman, is the first and longest-running index based on actual revenue and earnings (defined as earnings before interest, taxes, depreciation and amortization, or “EBITDA”) for middle market companies. It measures the median revenue and earnings growth of approximately 110–150 private U.S. companies in the loan portfolio of Golub Capital, a leading middle market lender. Reported shortly before public company quarterly earnings season, the GCAI has served as a reliable indicator of the overall growth rates in revenue and earnings of public companies in market indexes such as the S&P 500 and S&P SmallCap 600 (“S&P 600”), as well as quarterly Gross Domestic Product (“GDP”), according to statistical back-testing dating back to 2012, when data began to be tracked.

The size and diversity of the Golub Capital loan portfolio ensure that the confidentiality of all company-specific information used in the index is maintained in both the aggregate and industry segment data.

We believe the results (1) are representative of the general performance of middle market companies, which are a major contributor to U.S. private sector employment; (2) can be easily compared to the performance of the public companies that make up major stock indexes; (3) are relevant to the aggregate economic performance of the U.S. economy and (4) provide timely information for the investment community.

The companies in the GCAI operate in a wide range of industries. Results are provided for the total universe of GCAI constituents and by industry segment. Given the index’s limited exposure to Financials, Utilities, Energy and Materials, comparisons are made to the S&P 500 and S&P 600 as well as to “adjusted” versions of those indexes that exclude the aforementioned sectors.

About the Golub Capital Middle Market Report
The Golub Capital Middle Market Report analyzes the results of the Golub Capital Altman Index (“GCAI”), which measures the median revenue and earnings growth of approximately 110–150 privately owned companies in the Golub Capital loan portfolio for the first two months of each calendar quarter. It compares these results to the financial performance of well-known market indexes, including the S&P 500 and S&P SmallCap 600. The GCAI is produced by Golub Capital in collaboration with credit expert Dr. Edward I. Altman. Effective Q2 2022, the Golub Capital Altman Index (GCAI) excludes Golub Capital portfolio companies that have recurring revenue-based credit facilities. The data referenced herein may not reflect all companies in the loan portfolio of Golub Capital during the time periods indicated.

About Golub Capital
Golub Capital is a market-leading, award-winning direct lender and experienced credit asset manager. We specialize in delivering reliable, creative and compelling financing solutions to companies backed by private equity sponsors. Our sponsor finance expertise also forms the foundation of our Broadly Syndicated Loan and Credit Opportunities investment programs. We nurture long-term, win-win partnerships that inspire repeat business from private equity sponsors and investors.

As of January 1, 2024, Golub Capital had over 875 employees and over $65 billion of capital under management, a gross measure of invested capital including leverage. The firm has lending offices in New York, Chicago, Miami, San Francisco and London. For more information, please visit golubcapital.com.


About Dr. Edward I. Altman
A leading expert on credit markets, Dr. Edward I. Altman is the Max L. Heine Professor of Finance, Emeritus at the NYU Stern School of Business, and Director of Research in Credit and Debt Markets at the NYU Salomon Center for the Study of Financial Institutions. He is currently an advisor to several foreign central banks. Professor Altman has published or edited two-dozen books and over 150 articles in scholarly finance, accounting and economic journals. He has been inducted into the Fixed Income Analysts Society Hall of Fame, served as President of the Financial Management Association, was an FMA Fellow, and was amongst the inaugural inductees into the Turnaround Management Association Hall of Fame. He received his MBA and Ph.D. in Finance from the University of California, Los Angeles.

Important Disclosure
The Golub Capital Altman Index is provided as an indicator only and does not constitute investment advice or the offer to sell or a solicitation to buy any security. Some of these statements constitute forward-looking statements, which may be predictions about future events, future performance, or future financial conditions. Some of these statements reflect opinions based upon the data presented in the Index, and these opinions may be incorrect. Actual results could vary materially from those implied or expressed in such forward-looking statements for any reason. The Golub Capital Altman Index has been created on the basis of information provided by third-party sources that are believed to be reliable, but the information has not been verified independently by Golub Capital. Golub Capital makes no warranty or representation as to the accuracy or completeness of such third-party information.

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U.S. Middle Market Performance Remains Strong, Defying Consensus

Press Release
January 9, 2024
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