easy · Private Credit & Debt market-sourcing-sponsor-dynamics
A sponsor-backed company pays its PE parent a 'Management Monitoring Fee' of $500,000 annually.
Why do lenders often see this as a valid EBITDA add-back?
- It improves the company's credit rating
- The fee is often restricted or subordinated to debt payments in distress
- It is a non-cash accounting entry
- The fee represents a core operational cost
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