Antitrust focus on private equity funds and serial acquisitions

Until relatively recently, private equity buyers were viewed as largely benign. Where antitrust regulators expressed concerns with private equity buyers, it was generally in the context of them being viewed as sub-optimal divestiture buyers. This changed during the Trump administration where the Democratic minority began to voice concerns about the incentives of private equity players. READ MORE

Liquidity Challenges in Private Equity: Where are the Bright Spots?

If there’s one topic that has dominated the minds of private equity investors in recent months, it’s liquidity. It is so present that you can now even buy T-shirts on Amazon emblazoned with the phrase “DPI is the new IRR”. DPI, or Distributions to Paid-in Capital, measures how much capital a fund has returned to its investors relative to what has been called. Putting DPI ahead of the industry’s widely promoted performance metric IRR (Internal Rate of Return) sends a clear message to managers: stop focusing on returns and start selling stakes to generate liquidity. READ MORE

The Challenges and Benefits of Partial Exits

As private equity (PE) firms and financial sponsors of all varieties look for ways to generate liquidity in today’s economic climate, partial exits are becoming a tool that some firms leverage to provide returns to investors. PitchBook reports on several recent examples of partial exits by firms across various sectors, noting that these are not necessarily a bad thing, just a sign of the current climate. With firms beginning to utilize this option more frequently, below we look at the issues to consider when weighing a partial exit. READ MORE

Has private equity become a Ponzi scheme?

The economist Hyman Minsky’s name can once more be heard in ominous whispers around Wall Street. Private equity firms have recently been undertaking such funny financial manoeuvres that those who invest in the funds have had to put a stop to it. With private equity markets depressed, fund managers have been taking on so-called net asset value (NAV) loans to pay their investors’ dividends. Far from being happy to get their money, investors realised that the funds they had invested in were borrowing from Peter to pay Paul, and told them to cut it out. READ MORE

Private equity has become hazardous terrain for investors

The rise and rise of private markets has a feeling of inexorability about it. Despite increased financing costs and an uncertain growth outlook, private market assets under management totalled $13.1tn on June 30 last year, having grown at nearly 20 per cent a year since 2018, according to consultants McKinsey. While fundraising has declined from its 2021 peak, a recent survey by State Street found that a majority of institutional investors intended to increase their exposure to almost all private markets, including infrastructure, private debt, private equity and real estate. READ MORE

More Tech and Venture Capital Execs Are Coming Out as MAGA Believers

It was barely half an hour after shots rang out at a Donald Trump rally in Pennsylvania, with the candidate apparently among the wounded, that Elon Musk took to X, formerly Twitter, and formally backed him for president. “I fully endorse President Trump and hope for his rapid recovery,” Musk wrote, sharing video of the chaotic scene. He meanwhile set about blaming the Secret Service for the attempted assassination, which killed one attendee and injured two others, and amplifying posts that implied their “diversity hires” were a factor in the failure to prevent it. READ MORE

How venture capital has changed since the pandemic

Venture capital has significantly changed since its peak in early 2021. Low interest rates helped investors deploy significant capital into unicorn startups, helping them reach new heights and make their public debuts. However, as the pandemic's effects started to take a toll and inflation began to strain available capital, more companies took longer to list and hit the market. So, how should investors and businesses navigate this current market? And what options exist outside of venture capital for businesses looking to raise funds? READ MORE

J.D. Vance's short career in venture capital

Venture capital has its vice presidential candidate, with Donald Trump yesterday picking J.D. Vance to be his running mate.

The big picture: Vance wasn't a successful or failed VC. Namely because he didn't have enough time, spending just six years at three different firms.

Catch up quick: Vance was a corporate lawyer who went to Silicon Valley and got connected with Peter Thiel, via a two-year stint at venture capital firm Mithril Capital. READ MORE

Global Funding And M&A Picked Up In Q2, While AI Funding Mushroomed

Global startup funding picked up in the second quarter, reaching $79 billion — rising 16% quarter over quarter and 12% from the $71 billion invested in Q2 2023. Mega-rounds — fundings $100 million and above — accounted for much of the increase this past quarter.

Funding to companies in AI more than doubled quarter over quarter to $24 billion — representing 30% of all dollars invested, the largest quarter for AI funding in recent years. And there are signs that larger M&A deals increased in Q2, providing much-needed liquidity to venture capital markets. READ MORE

IPO market quickens as stocks hit record highs during H1 2024

The worldwide IPO market in coming quarters faces possible turbulence from intensifying regional conflicts, the uneven pace of monetary easing and “an election super-cycle,” EY said, noting that more than 50% of the world’s population generating nearly 60% of global gross domestic product goes to the polls this year.

Election outcomes “may prompt changes in government spending, debt levels, interest rate policies, currency strength and global supply chains,” EY said. READ MORE

Robotics Startups On The Rise In 2024

So far, 2024 is shaping up as a not-so-shabby year for robotics startup funding.

Developers of workplace robots, robotic surgery technologies, and even humanoid models have all raised large rounds in the past six months. The artificial intelligence funding boom has also helped boost the space, with investors backing big deals at the intersection of AI and robotics. READ MORE

The VC Platform Role: What It Is And Why It Matters

I recently had the pleasure of speaking at the VC Platform Summit in Miami, a 3-day event that brought together 500-plus VC professionals focused on platform roles across 340 firms.

The platform role has come to wear a lot of hats in the world of private capital—from business development to community-building to recruiting and marketing—and matured substantially over the past decade. Perhaps the most central and important theme today is portfolio value creation. READ MORE

Will Regulatory Scrutiny Impact Private Equity Investment in Healthcare?

Over the past decade, private equity investors have shown a particular interest in acquiring or investing in various healthcare providers and services. This includes physician practices across multiple sub-specialties, home healthcare providers, behavioral healthcare clinics, skilled nursing facilities, urgent care clinics, and other specialty clinics. This trend is driven by the attractive returns that healthcare investments have generated, fueled by factors such as a fragmented market, industry growth due to an aging population, technological advancements, and evolving healthcare needs.  READ MORE

Global Venture Capital Outlook: The Latest Trends

In the first quarter of 2024, global venture capital funding grew by approximately 16% quarter over quarter, reaching $89 billion distributed over 4,600 deals (see Figure 1). The US experienced the most substantial spike, with a 72% quarter-over-quarter increase in funding, aided by large investments in technology, AI, energy, and healthcare. China saw a 13% increase in quarter-over-quarter funding, bolstered by investments in the automotive and AI sectors. In contrast, Europe reported a 28% decline in funding, primarily because of ongoing macroeconomic uncertainty and the UK’s technical recession.

Average deal sizes grew across all funding stages, with early-stage deals recording 43% quarter-over-quarter growth, followed by seed- and late-stage deals with sequential growth of 17% and 21%, respectively (see Figure 2). In particular, Series B deals surged, propelled by sectors such as generative AI, clean energy, and healthcare. READ MORE

‘Venture capitalist’ offered to buy Virgin Orbit for $200m. He had ‘less than a buck’ to his name, SEC says

A wannabe venture capitalist who made a “bogus offer” to buy Richard Branson’s satellite company is being sued by the Securities and Exchange Commission (SEC).

Matthew Brown, from Dallas-Fort Worth, owner of investment managing firm Matthew Brown Companies LLC, submitted a fake picture of a bank account in March 2023 that said he had $182 million while trying to purchase Virgin Orbit, a now-defunct company that launched small satellites into orbit, according to the SEC lawsuit. READ MORE

Private Equity Isn't Selling Right Now, But Maybe You Should

A dam has been built in the middle market M&A world. This is no ordinary beaver dam, but the equivalent to that of the Hoover Dam.

This dam's construction reflects a convergence of factors within the private equity sector and the broader M&A transaction landscape. Currently, private equity firms are flush with cash reserves, totaling a staggering $1.2 trillion in buyout funds alone. However, despite this abundance of capital, the market is experiencing an absence of investment opportunities. The low supply of acquisition targets is made worse by several factors, including elevated interest rates, debt multiples at a 10-year low, and traditional lenders being tight with credit and underwriting. All of this makes it difficult for private equity to buy new companies. READ MORE

Navigating DEI When Hiring Executive Leaders In Private Equity

In a historically homogenous sector, diversity rises as a leading differentiator among high performing private equity firms and their portfolio companies. From rising interest rates to increasing C-suite turnover, private equity firms and their portfolio companies have recently faced a spectrum of challenges that have limited their potential to achieve growth, according to a new report from Slayton Search Partners’ Dan Dunn. “Leaders within these firms are embarking on a variety of strategic imperatives to jumpstart their value creation,” he said. “For some, that looks like tapping into industry-specific digital transformation, overhauling their tax strategy, or building strategic ESG initiatives.” READ MORE