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Illustration: Aïda Amer/Axios

Bankers have a reputation for being coin-operated — eager to bend reality on behalf of high-paying clients. Unlike in past boom times, however, they're currently holding the line on contortion.

Why it matters: Private equity-owned businesses are more likely to weather an economic downturn than they were before the Great Recession, which protects both jobs and limited partner investments.

By the numbers: Average debt multiples for U.S. leveraged buyouts were 5.9x for the first half of 2021, according to S&P Global Market Intelligence’s LCD. That's slightly higher than the 5.7x mark for 2020, but still below the recommended ceiling set by the Treasury in 2013.

  • Average interest coverage ratios, which refer to EBITDA vs. interest, were 3.5x for both 2020 and the first half of 2021. They were only 2.1x back in 2007.
  • If you look at fixed charge coverage ratios, which subtract capital expenditures from EBITDA, multiple sources say it's been sticking close to 2:1. Before the Great Recession, it was 1:1 (or sometimes even less), which meant companies had virtually no wiggle room if things went south.
  • Caveats: There can be a tendency to play fast and loose with earnings calculations, creating what my colleague Kate Marino refers to as "fake EBITDA." It's also true that banks continue to give very loose leveraged loan terms, particularly when it comes to covenants.

The bottom line: Lenders are saving private equity from itself, and that could pay off for everyone in the end.

Go deeper

Latino businesses get scant venture capital

Illustration: Aïda Amer/Axios

Less than 1% of funds from the top 25 venture capital and private equity firms wind up in the hands of Latino-owned businesses despite the fast pace of Hispanics opening up new enterprises, a study found.

Why it matters: The meager VC and PE investment going to Latinos highlights the lack of capital Hispanics face when trying to launch businesses, and prevents growth in one of the fastest-growing segments of the U.S. economy.

Biden rejects Trump's latest executive privilege claims

Photo: Jim Watson and Saul Loeb/AFP via Getty Images

The White House on Monday rejected two more of former President Trump's claims of executive privilege over documents that the House select committee investigating the Jan. 6 Capitol riot requested, CNN first reported.

Why it matters: Trump's legal team is seeking to block some of the panel's requests for records by invoking executive privilege, which can allow presidents and their aides to sidestep congressional scrutiny. The Biden administration has maintained that it will evaluate on a case-by-case basis.

Amazon warehouse workers in New York file petition to hold unionization vote

Amazon workers and their supporters rally outside the National Labor Relations Board's regional office in Brooklyn, New York City, after filing a petition requesting an election to form a union. Photo: Gabby Jones/Bloomberg via Getty Images

Amazon warehouse workers in New York City filed a petition on Monday with the National Labor Relations Board (NLRB) to hold a vote on unionization.

Why it matters: The move comes six months after an organizing effort was defeated at Amazon's distribution center in Alabama.