Monroe’s Koenig: Finding the sweet spot in the mid-market

The less crowded lower mid-market offers opportunity to differentiate returns, the Monroe CEO says.

Focusing on the smaller companies in the less crowded and less competitive end of the mid-market is how Monroe Capital differentiates its transaction flow and returns, Ted Koenig, firm president and CEO, told Private Debt Investor.

The Chicago-based lender targets companies in the $3 million to $30 million EBDITA range, as “there’s not as many lenders chasing that market”, he said.

“It’s more important to execute in that market [as] it’s not as much a commodity product.”

Since 2004, when the firm first became active in this space, it has done 600 to 700 transactions in the lower mid-market, working with 240 private equity firms. Koenig said 60 percent of Monroe’s deals are with private equity sponsors and the other 40 percent are non-sponsored transactions.

“We think we’ve developed an origination model that will lead to proprietary transaction flow,” Koenig said, “which for us, is all about generating the best possible amount of deals, so we can sift through them on a credit basis and identify what’s appropriate for LPs.”

Monroe has offices in New York, Boston, Chicago, Atlanta, Toronto, Charlotte, Los Angeles, San Francisco and Dallas, with origination professionals in each.  In addition, the firm has a vertical industry that focuses on lending for healthcare, media, technology, retail and consumer goods.