SBIC: Historical Performance Report with Brett Palmer and Greg Brown

In our fourth episode of "Family Office Fundamentals," we focus on the impressive performance and impact of Small Business Investment Companies (SBICs). Our special guests are Brett Palmer, President of the Small Business Investor Alliance (SBIA), and Gregory Brown, Professor at UNC Kenan-Flagler Business School and Research Director at the Institute for Private Capital.

We discuss the findings of a recently published White Paper titled "The Performance of Small Business Investment Companies" by the Institute for Private Capital. Key insights include:

1) Over the 2000-2020 period, SBICs achieved an average internal rate of return (IRR) of 16.9%, which is 4.13% higher than a comparable set of non-SBIC peer funds.
2) The average multiple on invested capital (MOIC) for SBICs is 2.3x, outpacing comparable non-SBIC funds by 0.74x.
3) Optimal leverage ratios for SBICs range from 1.00x to 1.75x, indicating that balanced leverage optimizes returns while mitigating risk.

The White Paper uses a survey of SBICs and MSCI-Burgiss data to show that SBIC funds outperform their peers by about 4% in IRR and 0.7x in MOIC. Additionally, Kaplan-Schoar public market equivalents (PMEs) reveal SBICs outperform public benchmarks, with larger funds generating higher returns when controlling for factors like vintage year and strategy.

Our discussion covers the methodology of data collection and analysis, the report's findings, and how SBICs contribute to community and economic support beyond financial returns. Discover how SBICs not only outperform their peers but also play a crucial role in fostering economic growth and community development. Tune in to hear expert insights on why these investment vehicles are a hidden gem in the world of private markets.

Please find the publication here : https://uncipc.org/index.php/publication/the-performance-of-small-business-investment-companies/
The content provided in this podcast is for informational purposes only
and should not be construed as investment advice. The views and opinions
expressed by the author and speakers are their own and do not
necessarily reflect the views of Family Office Fundamentals or its
affiliates. Listeners are encouraged to conduct their own research and
consult with financial professionals before making any investment
decisions.

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