PE turns to add-ons with large LBOs out of reach

Private equity investors are holding off on big ticket leveraged buyouts until debt becomes affordable again. In the meantime, add-on strategies provide some relief.

Tasked with a challenging exit environment and a dwindling supply of affordable debt financing, PE managers are turning to add-ons, which are smaller-sized target acquisitions made through existing portfolio companies, to meet capital deployment mandates and keep portfolio company multiples afloat. In 2022, add-ons comprised 77% of US PE deals, an approximate jump of 3 percentage points from 2021, according to PitchBook data. READ MORE

Have Tech Jobs Lost Their Luster?

When Roger Lee graduated from Harvard in 2008, he and his fellow classmates were thrust into a new kind of working world. Young and college-educated, many of them witnessed, for the first time, the meltdown of the banking sector, and were disillusioned with the idea of working in the once-stable finance field.

Years later, Lee founded the crowdsourced layoffs database Layoffs.fyi, which began documenting tech layoffs during COVID-19. Since then, Lee has been entrenched in layoffs data and employee outlook data with his co-founded companies Comprehensive and Human Interest, which offer employee benefits. READ MORE

Private equity investor identified as political contributor allegedly duped by George Santos

Private equity investor Andrew Intrater is one of the people federal prosecutors allege Rep. George Santos induced to donate money as part of an alleged scheme that diverted purported political contributions to Santos’ personal use, Intrater’s lawyer confirmed to CNN on Thursday.

In a 13-count indictment made public Wednesday, prosecutors alleged that Santos and an unnamed associate duped two donors – described only as Contributor #1 and Contributor #2 – into giving $25,000 apiece to support the Republican’s candidacy last year. READ MORE

Are private markets a route to higher returns?

The latest bout of turmoil in global markets has sent fund managers scurrying to reassess their risks, not least in US banking shares. But one strategy seems likely to survive the stock take, just as it has the ups and downs of the past three years: the drive to private markets. If you believe the hype surrounding private assets, the old model of managing your money via a long-only fund run by a stock picking manager is “out” and everything private is in. READ MORE

US VC Valuations Report

US VC valuations extend slump as down rounds creep up in Q1

Venture capital valuations continued their descent in Q1. The dearth of IPO exits, a pullback from nontraditional investors, and ongoing economic headwinds have all contributed to lower valuations and smaller round sizes for all stages except seed. READ MORE

Labor Organizers Launch a New Model for the Fight Against Private Equity

On May Day, a small group of labor advocates and workers weaved through midtown Manhattan, stopping at the shiny corporate headquarters of several firms with names like KKR, Sycamore Partners, Apollo Global Management, BC Partners and Roark Capital Group.

Most people don’t recognize these names, or if they do, know very little about them. But these are some of the wealthiest and most influential firms on Wall Street, behemoths within the ultra-powerful but opaque financial sector known as private equity — the arm of Wall Street that oversees trillions in assets and specializes in buying out, restructuring and selling off privately owned businesses to turn a big profit. READ MORE

"It’s difficult to raise Seed today, and those who succeed have to work harder for it"

As we approach the finals of the StartUp+ competition, that serves as a springboard for startups at the beginning of their journey, we checked with senior members of the ecosystem on the affects of the changes the high-tech industry has been undergoing recently, where the opportunities are, and what recommendations investors give to their portfolio companies to survive and thrive in this period. READ MORE

How Startups Can Manage Their Cash Better — 4 Tips from a Venture Capitalist

The bankruptcy of Silicon Valley Bank caused a great deal of stress for many startup founders. Although U.S. financial regulators intervened and took charge of customer deposits, the incident has shown that financial markets remain unstable.

Amidst a banking panic, Signature Bank has suffered bankruptcy, while Credit Suisse is being acquired by its competitor UBS; First Republic Bank's customers have recently withdrawn over $100 billion. READ MORE

Unveiling the Top Areas of Venture Capital Investment in 2023

We know there has been an ongoing slowdown in venture capital funding for startups - this has been the case since 2022 and it continues to impact startups at all stages of growth. The slowdown appears to be leveling from 2022, however, suggesting that the market may be normalizing. Furthermore, investors are still active in certain key sectors and notable trends are beginning to emerge in the landscape this year. READ MORE

U.S. SEC adopts new rules around private fund disclosures, share buybacks

The U.S. Securities and Exchange Commission on Wednesday adopted new disclosure rules for hedge fund and private equity fund advisors aimed at increasing transparency, competition, and efficiency in the $25-trillion marketplace.

The rule-making updates Form PF, which was put in place following the financial crisis of 2008-2009 to monitor risks in the rapidly growing private fund sector, to boost the quality of confidential regulatory disclosures by large funds about their investment strategies and leverage. READ MORE

Why VC Specialization Is Good For Founders And Investors As Markets Mature

At one time, doctors were expected to have expertise in all aspects of the human body and treat every ailment. Nowadays, there is a specialist for every section of our anatomy. We can see a similar contrast in the professional expectations of athletes, then and now: Previously there was a one-size-fits-all conception of the athletic physique—strong, broad, long-limbed. As sports have diversified and victory in each arena relies on such small margins, competitors are determined to retain an edge and embrace diversification. READ MORE

Run, Unicorns, Run: April’s VC Funding Landscape In 3 Charts

Here’s how to earn a unicorn valuation in 2023 in one easy step. Ready?

Step 1: Already be a unicorn that’s raised bales of VC cash.

That’s what it seems to take to raise a big round these days. Of the 10 biggest venture rounds in April, four of the top five were raised by established unicorn companies that’d already raked in hundreds of millions in the past few years (or in the case of OpenAI, tens of billions in the past few months). READ MORE

In Favor Of VC-Backed Companies Building Profitably

Writ large, we still live in a "venture-first" startup culture. This means that most startups, most of the time, believe that they need to raise money from VCs and spend it in 12- to 18-month cycles in order to grow. The truth is, there’s another way: focusing on profitable, sustainable growth.

The good news is that this "venture-first" culture is shifting, given the current economic climate; this is especially true in healthcare, which saw a gluttony of funding in '21 and a pullback in '22. As happens in economic cycles, founders are shifting their mentalities and expectations. But the pendulum needs to continue to swing toward fiscal prudence and startup stability over a growth-at-all-costs mindset. READ MORE