Hello and welcome to Behind the Buyouts, The Deal’s podcast where we sit down with pros from the world of private equity and venture capital and drill down into their deals.

For our 14th podcast, David Magdol, president and chief investment officer at Main Street Capital Corp. (MAIN), talks about the business development company and his view of the economy through the lens of its 174 portfolio companies.

Retail and restaurant companies continue to recover, but Magdol sees strength elsewhere such as the consumer discretionary sector.

“There’s no question that inflation has come into the conversation at all our portfolio companies,” Magdol said.

Despite the threat of higher prices, Main Street Capital focuses on investing through economic cycles by working with strong businesses that represent a cross-section of the middle-market economy.

“We’re not trying to time the market,” Magdol said. “We’re trying to get a robust portfolio of investments for our shareholders that allows them to get access to the asset class.”

Magdol agreed that BDCs resemble index funds, in a sense. Instead of forming a basket of common stocks, the BDC holds debt and equity in about 174 private companies.

Houston-based Main Street Capital works with companies with revenue of $10 million to $100 million, often providing partial exits for family members retiring from multigenerational businesses.

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