Carolyn Briner
It's not you, it's m....(the market)
It's not you, it's m....(the market)
Joe Briner
Successful Exit 10 + 1
Successful Exit 10 + 1
Markets, Fed Policy
Joe Briner

TINA is an acronym for “there is no alternative”. We blogged about it in August 2016 and although we have had a world of changes since then, the fact remains that there is no alternative to low yields now just as there was no alternative then

Tina’s Back… I know you think you understand what you thought I said Vertical Capital Advisors Blog March 3, 2021 Actually, TINA never left.  TINA is an acronym for “there is no alternative”.  We blogged about it in Augu
James Cooper

For an entrepreneur, the pitch deck is a vital part of the capital raising process. But it’s purpose is not to raise capital. So what’s it for?

Your pitch deck is  not  intended to raise capital, but you can’t raise capital without one.  Isn’t this contradictory?  Not really. Keeping in mind that investment decisions are rarely (if ever) decided in the fir
Private Equity
James Cooper
VC Funding: Overhang, or Cliff?

VC funding hasn’t seen a massive downturn… yet. But have we already gone over the cliff? The data is backward looking, so the cliff may be close than it appears.

VC Funding: Overhang, or Cliff?

Carolyn Briner

It's not you, it's m....(the market)

It’s not you, it’s m…(the market)

The Roaring 20’s.  Well, it was really just 2021 but what a year it was!  At the lower end of the middle market where Vertical Capital Advisors does most of our work, 4Q2021 saw a record $190B in early stage investing globally which dropped precipitously to $62.2B by 4Q2023, rebounding only slightly to $66.1B in the first quarter of 2024 according to Crunchbase:

Source: https://news.crunchbase.com/venture/startup-funding-q1-2024-charts/

Anyone seeking venture, start-up or growth capital and even traditional M&A and strategic partnerships felt the pinch last year.  Capital allocators including banks pumped the brakes as inflation and interest rates surged while everyone sat in their perches scouring the horizon for the next macroeconomic event to crest.  Most are still waiting. 

So, it’s not you, it’s the market.  If you have been doing all of the actions that smart, adaptable business owners do but found little interest from capital sources in funding your growth, you are not alone.  Most businesses experienced a slowdown in funding and deals that normally would have been funded find themselves waiting patiently for the markets to normalize. 

What can you do if your business needs capital now?  If you have exhausted all of your efforts to find a capital partner, find a professional with a large network who can help you cast a broader net and be prepared to extend your timeline.  It will take longer to get your deal funded.  Also explore the use of technology to enhance your outreach.  We are doing that now using AI tools to extend our reach and engage with far more individuals than we can realistically contact directly.  Great opportunities will get funded, it will just take more creativity and time to get there.

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ABOUT VERTICAL CAPITAL ADVISORS

Vertical Capital Advisors is an Atlanta-area boutique investment banking firm built on creating tangible value for our clients, serving clients in just about every industry.  Our clients are both capital growers and capital allocators.  How can Vertical help your firm maximize value?

 

Carolyn Briner
Managing Director
Vertical Capital Advisors LLC
cbriner@verticalcapitaladvisors.com
866-912-9543 ext 108
678-591-4804

 

Exits Down 75%, IPOs Non-Existent, Secondaries Rising The markets they are a-changing

According to Pitchbook:

 “PE exits in the US dropped from $876.7 billion in 2021 to $295.8 billion in 2022, according to PitchBook's 2022 Annual US PE Breakdown, as investors held onto assets longer to ride out rising inflation, geopolitical turmoil and public market volatility. At the same time, the IPO market almost completely dried up, with public listings accounting for only 2.5% of exit value last year.

 The secondary market—specifically continuation vehicles and GP-led secondaries—offers alternative exit opportunities for GPs hoping to satiate investor demand for liquidity. A GP can retain an asset through a continuation vehicle by moving a trophy asset from one fund to another. In this type of transaction, LPs have the option to liquidate on the secondary market and GPs can retain the asset until the market becomes more favorable for a sale.  Lazard pegged 2022 as the second highest year on record for secondaries issuance and 2023 is setting up to be even bigger.”

 The capital markets are finding ways to continue to fund deals through the double-barrel gutshot of increasing interest rates and higher inflation.

 What does this mean for Main Street (Middle Market) Businesses?

 While deal volume is certainly down from the record levels of 2021, PE firms report a decrease in reserves of only about 10%, meaning there is still about $800B of liquidity in the system.  The question is how much is earmarked for new deals and how much is available for new platform acquisitions and add-ons?

 

As the graphic above shows, the 2021 vintage year has the greatest remaining bucket of cash followed by 2022.  Funds in these vintage years are still in their deployment phase so most of that capital is available to new acquisitions whole older vintage years will see fewer add-ons with the majority of cash reserved for operations.

While it makes sense to time an exit during a period of low interest rates, low inflation and relative economic stability, there is still plenty of capital available for quality businesses with consistent performance. 

The professionals at Vertical Capital Advisors have experienced many market cycles and can help you realize the maximum value for your business if now is the time consider an exit.

https://files.pitchbook.com/website/files/pdf/2022_Annual_US_PE_Breakdown.pdf