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1.Why Private Equity Is Targeting Individual Investors
Private equity firms are increasingly targeting individual investors as potential sources of capital. According to the Global Private Equity Report 2023, this trend is being driven by a number of factors, including the growing popularity of alternative investments among retail investors, the need for diversification in a low-yield environment, and the democratization of private markets through technology. This article explores why private equity firms are turning their attention to individual investors and what this means for the industry as a whole.
2.Private Equity Fueling Growth of Defense Mergers
Mergers and acquisitions in the aerospace, defense, and government sector decreased by 10% in 2022, but still beat the overall M&A market, according to a report by HigherGov. The report found that private equity investment has become a driving force in the ADG market, accounting for 47% of transactions and 41% of deal value. Private equity firms are increasingly comfortable with the defense sector due to its stable revenue streams and are buying companies earlier in their lifecycle to reduce investment risk. The report also noted the growth of global defense spending and the increasing importance of space and cybersecurity within the sector.
3.Going private: A guide to PE tech acquisitions
PE firms are buying publicly traded companies at a record pace, with $226.5 billion spent in H1 2022 alone. The PE model typically involves fixing underperforming companies and selling them for a profit, often by taking them private. After the buyout agreement is signed, a multi-month pre-closing period begins, during which the management of the acquired business freezes new investments. Once the acquisition closes, the new PE owner implements its playbook, which often includes cost-cutting and efficiency measures. As a key stakeholder, assessing the impact of an acquisition on your position can be challenging, as PE firms rarely disclose their strategies or investment rationales.
4.Women in VC: Taking stock of where we are
Experts Pamela Aldsworth and Katie Taormino discuss the progress and changes in the venture capital landscape for women. They highlight the rise of women-led funds and the emergence of proprietary networks for women in VC. While firms are being more intentional in their recruitment efforts, intentional retention and advancement of diverse talent is equally critical for sustainable progress. The experts also discuss market conditions that may disproportionately affect female founders and the role of the next generation of venture leaders in creating a more inclusive and diverse ecosystem.
5.Mark Zuckerberg announces new team at Meta working on A.I. products
Mark Zuckerberg has announced a new team at Meta, dedicated to developing AI products that will be used across the company's various platforms. The team, called AI@Meta, will be led by Facebook veteran Andrew Bosworth, and will work on building AI-powered features for products such as Meta's virtual and augmented reality devices, messaging apps, and social networking services.
6.Sullivan Street: Why a micro-focus pays in a downturn
Private equity investors can use their operational expertise to create value even during a downturn, according to Zeina Bain, managing partner at Sullivan Street Partners. The firm, which focuses on buyouts and special situations in Europe's lower middle market, targets complex businesses in three areas: carveouts, operational improvements and stakeholder complexity. Bain said she prefers to use private debt with small multiples and the firm's preferred exit strategy is a mix of sponsor and strategic audiences rather than an IPO. She added that current macroeconomic conditions present opportunities for her market.
7.There are still opportunities in VC firms despite a drop in funding
Despite a 35% drop in global venture funding in 2022, venture capital firm 500 Global remains bullish on the sector. The firm's managing partner, Vishal Harnal, said while there had been a "drop in the allocation towards ventures" in 2022, there was still $15bn of "dry powder" in venture capital available for deployment. Harnal added that long-time venture capitalists remained bullish towards investing in tech companies, with private valuations underwritten with a far longer time horizon, and less affected by daily news cycles.
8.The IPO drought could end soon—if these factors converge
The IPO market has been slow due to macroeconomic volatility, disagreements on valuations and pricing, and the fear of recession. So far this year, only nine US PE- and VC-backed IPOs have been issued, and most have been smaller than in previous years. It's uncertain when the market will fully recover, but it will likely depend on the convergence of various factors, such as a stabilized macroeconomic environment, more clarity on the direction of interest rates, greater alignment on pricing between buyers and sellers, and a leading company returning to public exchanges.