On the distressed investing panel at The Deal's Fifth Annual Private Capital Symposium Raquel Palmer, a partner at KPS Special Situations, talked about how the distressed opportunities are unfolding differently in the current cycle than in prior downturns.
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"Covenant-lite has been great for our dealflow," Palmer said. "Liquidity is still a great benchmark to see how well a company is doing. Once a company runs out of cash, that's it. Because of [2007's] leverage loan market, we're seeing companies with a lot more debt on them."

"Another major change [from past cycles] is that the lenders have completely changed," she continued. "Now it's a lot of hedge funds. I think you're going to see messier situations and more liquidations, as hedge funds aren't equipped to deal with the operational problems of many of these companies."
"In the bad times, we are a little more cautious," Palmer said. "The companies that are the worst in their industry are usually the first to fail, so we're being cautious here. We think that the companies that have trouble in the future are going to be the best opportunities." - George White
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