Market Trends 2019/20: Business Development Companies

This practice note covers recent market trends affecting business development companies (BDCs), particularly focusing on various types of securities offerings undertaken by public and private BDCs. BDCs are closed-end investment management companies that are specially regulated by the Investment Company Act of 1940, as amended (the 1940 Act). BDCs provide capital to, and invest in, small and middle-market companies in the United States. As a result of this investment purpose, BDCs are exempt from certain regulatory constraints imposed by the 1940 Act on traditional investment companies and generally benefit from pass-through tax treatment (i.e., the entity is not taxed at the entity level and tax obligations pass to the owners of the entity). For additional information on BDCs.