Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE HIERARCHY FOR INVESTMENTS???PORTFOLIO COMPOSITION (Tables)

v3.24.3
FAIR VALUE HIERARCHY FOR INVESTMENTS—PORTFOLIO COMPOSITION (Tables)
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Schedule of Fair Value Measurement Inputs and Valuation Techniques
The following tables provide a summary of the significant unobservable inputs used to fair value Main Street’s Level 3 portfolio investments as of September 30, 2024 and December 31, 2023:
Type of
Investment
Fair Value as of
September 30, 2024
(in thousands)
 Valuation Technique Significant Unobservable Inputs Range (4) Weighted-Average (4)(5) Median (4)
Equity investments $ 1,564,812  Discounted cash flow WACC
9.1% - 22.6%
 14.2  % 15.0  %
Market comparable / Enterprise value EBITDA multiple (1) (3)
4.8x - 8.9x (2)
 7.1x 6.4x
Debt investments $ 3,221,121  Discounted cash flow Risk adjusted discount factor (6)
9.8% - 18.9% (2)
 13.1  % 13.0  %
Expected principal recovery percentage
0.0% - 100.0%
 99.5  % 100.0  %
Debt investments $ 125,121  Market approach Third-party quote
27.5 - 99.9
 90.8 94.3
Total Level 3 investments $ 4,911,054 
____________________
(1)EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.
(2)Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 2.0x - 15.7x and the range for risk adjusted discount factor is 7.0% - 31.8%.
(3)The fair value of the equity investment in the External Investment Manager is based on a fee multiple of 7.9x. The fair value determination is based on a discounted, blended multiple based on the multiples for similar businesses in active markets and actual multiples used in private transactions.
(4)Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

(5)Weighted-average is calculated for each significant unobservable input based on the applicable security’s fair value.
(6)Discount rate includes the effect of the standard SOFR base rate, as applicable.
Type of Investment
Fair Value as of December 31, 2023
(in thousands)
 Valuation Technique Significant Unobservable Inputs Range (4) Weighted-Average (4)(5) Median (4)
Equity investments $ 1,402,354  Discounted cash flow WACC
9.7% - 22.7%
 14.5  % 15.5  %
Market comparable / Enterprise value EBITDA multiple (1) (3)
4.8x - 8.9x (2)
 7.1x 6.4x
Debt investments $ 2,720,425  Discounted cash flow Risk adjusted discount factor (6)
9.8% - 18.0% (2)
 12.9  % 13.0  %
Expected principal recovery percentage
0.0% - 100.0%
 99.7  % 100.0  %
Debt investments $ 163,492  Market approach Third-party quote
3.0 - 100.0
 89.8 92.4
Total Level 3 investments $ 4,286,271 
____________________
(1)EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.
(2)Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 2.0x - 15.7x and the range for risk adjusted discount factor is 7.0% - 31.6%.
(3)The fair value of the equity investment in the External Investment Manager is based on a fee multiple of 7.2x. The fair value determination is based on a discounted, blended multiple based on the multiples for similar businesses in active markets and actual multiples used in private transactions.
(4)Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

(5)Weighted-average is calculated for each significant unobservable input based on the applicable security’s fair value.
(6)Discount rate includes the effect of the standard SOFR base rate, as applicable.
Schedule of Changes in Fair Value of Main Street’s Level 3 Portfolio Investments
The following tables provide a summary of changes in fair value of Main Street’s Level 3 portfolio investments for the nine months ended September 30, 2024 and 2023 (amounts in thousands):
Type of Investment
Fair Value
as of
December 31, 2023
 Transfers Into Level 3 Hierarchy Redemptions/ Repayments New Investments Net Changes from Unrealized to Realized Net Unrealized Appreciation (Depreciation) Other (1)
Fair Value
as of
September 30, 2024
Debt $ 2,883,917  $ —  $ (637,879) $ 1,125,074  $ 5,270  $ (48,999) $ 18,859  $ 3,346,242 
Equity 1,395,744  —  (37,153) 85,289  (26,567) 158,565  (18,859) 1,557,019 
Equity Warrant 6,610  —  —  4,514  (110) (3,221) —  7,793 
$ 4,286,271  $ —  $ (675,032) $ 1,214,877  $ (21,407) $ 106,345  $ —  $ 4,911,054 
____________________
(1)Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information in the Consolidated Statements of Cash Flows.
Type of Investment
Fair Value
as of
December 31, 2022
 Transfers Into Level 3 Hierarchy Redemptions/ Repayments New Investments Net Changes from Unrealized to Realized Net Unrealized Appreciation (Depreciation) Other (1)
Fair Value
as of
September 30, 2023
Debt $ 2,928,196  $ —  $ (536,800) $ 547,102  $ 101,276  $ (26,869) $ (29,969) $ 2,982,936 
Equity 1,166,643  —  (40,261) 55,699  2,394  88,079  32,322  1,304,876 
Equity Warrant 5,434  —  —  2,091  —  1,961  (2,576) 6,910 
$ 4,100,273  $ —  $ (577,061) $ 604,892  $ 103,670  $ 63,171  $ (223) $ 4,294,722 
____________________
(1)Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information in the Consolidated Statements of Cash Flows.
Schedule of Portfolio Investments by Level in the Fair Value Hierarchy
As of September 30, 2024 and December 31, 2023, Main Street’s investments at fair value were categorized as follows in the fair value hierarchy for ASC 820 purposes:
Fair Value Measurements
(in thousands)
As of September 30, 2024
 Fair Value Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		 Significant Other
Observable Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)
LMM portfolio investments $ 2,468,794  $ —  $ —  $ 2,468,794 
Private Loan portfolio investments 1,883,291  —  —  1,883,291 
Middle Market portfolio investments 178,194  —  —  178,194 
Other Portfolio investments 162,405  —  —  162,405 
External Investment Manager 218,370  —  —  218,370 
Total investments $ 4,911,054  $ —  $ —  $ 4,911,054 
Fair Value Measurements
(in thousands)
As of December 31, 2023
 Fair Value Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		 Significant Other
Observable Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)
LMM portfolio investments $ 2,273,000  $ —  $ —  $ 2,273,000 
Private Loan portfolio investments 1,453,549  —  —  1,453,549 
Middle Market portfolio investments 243,695  —  —  243,695 
Other Portfolio investments 141,964  —  —  141,964 
External Investment Manager 174,063  —  —  174,063 
Total investments $ 4,286,271  $ —  $ —  $ 4,286,271 
Schedule of Investment Holdings
The following tables provide a summary of Main Street’s investments in the LMM, Private Loan and Middle Market portfolios as of September 30, 2024 and December 31, 2023 (this information excludes Other Portfolio investments and the External Investment Manager, which are discussed further below).
As of September 30, 2024
LMM (a) Private Loan Middle Market
(dollars in millions)
Number of portfolio companies 84  92  17 
Fair value $ 2,468.8  $ 1,883.3  $ 178.2 
Cost $ 1,924.5  $ 1,937.7  $ 218.3 
Debt investments as a % of portfolio (at cost) 72.2  % 95.9  % 88.0  %
Equity investments as a % of portfolio (at cost) 27.8  % 4.1  % 12.0  %
% of debt investments at cost secured by first priority lien 99.2  % 99.9  % 97.6  %
Weighted-average annual effective yield (b) 13.0  % 12.4  % 12.6  %
Average EBITDA (c) $ 9.6  $ 35.0  $ 53.1 
____________________
(a)As of September 30, 2024, Main Street had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 39%.
(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of September 30, 2024, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield on Main Street’s debt portfolio as of September 30, 2024 including debt investments on non-accrual status was 12.3% for its LMM portfolio, 12.0% for its Private Loan portfolio and 10.6% for its Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of Main Street’s common stock will realize on its investment because it does not reflect changes in the market value of Main Street’s stock, Main Street’s utilization of debt capital in its capital structure, Main Street’s expenses or any sales load paid by an investor.
(c)The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including four LMM portfolio companies, five Private Loan portfolio companies and two Middle Market portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate and those portfolio companies whose primary operations have ceased and only residual value remains.
As of December 31, 2023
LMM (a) Private Loan Middle Market
(dollars in millions)
Number of portfolio companies 80  87  23 
Fair value $ 2,273.0  $ 1,453.5  $ 243.7 
Cost $ 1,782.9  $ 1,470.1  $ 294.4 
Debt investments as a % of portfolio (at cost) 72.0  % 94.7  % 91.4  %
Equity investments as a % of portfolio (at cost) 28.0  % 5.3  % 8.6  %
% of debt investments at cost secured by first priority lien 99.2  % 100.0  % 99.1  %
Weighted-average annual effective yield (b) 13.0  % 12.9  % 12.5  %
Average EBITDA (c) $ 8.2  $ 27.2  $ 64.2 
____________________
(a)As of December 31, 2023, Main Street had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 40%.
(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2023, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield on Main Street’s debt portfolio as of December 31, 2023 including debt investments on non-accrual status was 12.9% for its LMM portfolio, 12.5% for its Private Loan portfolio and 10.8% for its Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of Main Street’s common stock will realize on its investment because it does not reflect changes in the market value of Main Street’s stock, Main Street’s utilization of debt capital in its capital structure, Main Street’s expenses or any sales load paid by an investor.
(c)The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including two LMM portfolio companies and two Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.
The following tables summarize the composition of Main Street’s total combined LMM, Private Loan and Middle Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM, Private Loan and Middle Market portfolio investments, as of September 30, 2024 and December 31, 2023 (this information excludes Other Portfolio investments and the External Investment Manager, which are discussed above).
Cost: September 30, 2024 December 31, 2023
First lien debt 83.9  % 82.7  %
Equity 15.4  16.8 
Second lien debt 0.2  0.1 
Equity warrants 0.3  0.2 
Other 0.2  0.2 
100.0  % 100.0  %
Fair Value: September 30, 2024 December 31, 2023
First lien debt 72.7  % 71.6  %
Equity 26.7  27.8 
Second lien debt 0.2  0.2 
Equity warrants 0.2  0.2 
Other 0.2  0.2 
100.0  % 100.0  %
The following tables summarize the composition of Main Street’s total combined LMM, Private Loan and Middle Market portfolio investments by geographic region of the United States and other countries at cost and fair value as a percentage of the total combined LMM, Private Loan and Middle Market portfolio investments, as of September 30, 2024 and December 31, 2023 (this information excludes Other Portfolio investments and the External Investment Manager). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.
Cost: September 30, 2024 December 31, 2023
West 25.3  % 25.8  %
Midwest 23.1  17.0 
Northeast 22.6  22.3 
Southwest 14.8  19.7 
Southeast 12.4  13.1 
Canada 0.3  0.4 
Other Non-United States 1.5  1.7 
100.0  % 100.0  %
Fair Value: September 30, 2024 December 31, 2023
West 24.7  % 25.4  %
Midwest 23.8  18.1 
Northeast 21.6  21.3 
Southwest 17.6  22.0 
Southeast 10.6  11.3 
Canada 0.3  0.3 
Other Non-United States 1.4  1.6 
100.0  % 100.0  %
Main Street’s LMM, Private Loan and Middle Market portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of Main Street’s total combined LMM, Private Loan and Middle Market portfolio investments by industry at cost and fair value as of September 30, 2024 and December 31, 2023 (this information excludes Other Portfolio investments and the External Investment Manager).
Cost: September 30, 2024 December 31, 2023
Professional Services 7.7  % 6.0  %
Machinery 7.6  7.7 
Internet Software & Services 7.1  7.6 
Electrical Equipment 5.3  1.6 
Commercial Services & Supplies 4.8  4.5 
Diversified Consumer Services 4.3  4.9 
Health Care Providers & Services 4.2  5.4 
Auto Components 4.0  1.6 
Distributors 4.0  4.3 
IT Services 3.9  5.0 
Construction & Engineering 3.8  4.9 
Containers & Packaging 3.8  3.8 
Energy Equipment & Services 3.1  2.7 
Textiles, Apparel & Luxury Goods 2.8  3.2 
Tobacco 2.8  3.1 
Leisure Equipment & Products 2.4  3.1 
Computers & Peripherals 2.2  2.7 
Software 2.2  2.0 
Specialty Retail 2.2  2.1 
Aerospace & Defense 2.0  2.9 
Media 1.8  2.4 
Food Products 1.7  1.6 
Food & Staples Retailing 1.6  1.6 
Building Products 1.5  1.7 
Diversified Financial Services 1.4  1.7 
Chemicals 1.3  1.0 
Electronic Equipment, Instruments & Components 1.3  1.5 
Hotels, Restaurants & Leisure 1.2  1.1 
Internet & Catalog Retail 1.2  1.3 
Communications Equipment 1.1  1.2 
Health Care Equipment & Supplies 1.1  1.3 
Household Products 0.8  1.0 
Other (1) 3.8  3.5 
100.0  % 100.0  %
____________________
(1)Includes various industries with each industry individually less than 1.0% of the total combined LMM, Private Loan and Middle Market portfolio investments at each date.
Fair Value: September 30, 2024 December 31, 2023
Machinery 9.2  % 8.8  %
Professional Services 8.3  6.5 
Diversified Consumer Services 6.1  7.1 
Internet Software & Services 6.0  6.2 
Electrical Equipment 4.9  1.7 
Construction & Engineering 4.2  5.1 
Distributors 4.2  4.5 
Health Care Providers & Services 4.2  5.0 
Commercial Services & Supplies 4.1  3.9 
Computers & Peripherals 3.9  4.4 
Containers & Packaging 3.8  3.9 
IT Services 3.7  4.6 
Auto Components 3.6  1.5 
Energy Equipment & Services 3.0  2.5 
Tobacco 3.0  3.2 
Specialty Retail 2.7  2.7 
Software 2.2  2.1 
Media 2.0  2.7 
Aerospace & Defense 1.9  2.7 
Textiles, Apparel & Luxury Goods 1.9  2.6 
Leisure Equipment & Products 1.8  2.5 
Food Products 1.6  1.5 
Building Products 1.4  1.5 
Diversified Financial Services 1.3  1.6 
Food & Staples Retailing 1.3  1.2 
Chemicals 1.2  0.9 
Internet & Catalog Retail 1.0  1.2 
Air Freight & Logistics 0.9  1.1 
Health Care Equipment & Supplies 0.9  1.0 
Construction Materials 0.3  1.0 
Other (1) 5.4  % 4.8  %
100.0  % 100.0  %
____________________
(1)Includes various industries with each industry individually less than 1.0% of the total combined LMM, Private Loan and Middle Market portfolio investments at each date.