Eric Linn

The Private Investing Cash Drought: The Big Point The Rabid Capitalist: The Big Point is a brief summary of a detailed note available to paid subscribers. Private equity funds’ cash distribution collapse has led some institutions to pause additional investing into illiquid asset classes. These asset classes have been experiencing their worst level of investment exit volumes in a decade. The cash drought will prolong the recovery in private investments, damaging existing asset owners and founders, but benefiting opportunistic investors. Complete content is available for a $15 monthly subscription. Click here to subscribe: https://lnkd.in/efrCjxRD

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PE Backed Health Care Transactions-Deal Structure Article Interesting Article on Deal Structures, we have sold a majority of the companies we represent to PE Backed organizations. The size of our transactions are typically structured as cash/holdbacks for a period of time, something our sellers prefer. Healthcare private equity update: McDermott Will & Emery released the firm's latest healthcare private equity market report this week, providing a readout on the final sector-specific deal trends from 2023. The firm’s data support the idea of a general trend toward more active deal structuring as buyers contend with choppy market conditions and work to bridge gaps in valuation expectations. Rollover equity structures jumped in popularity and are now used in more than 65 percent of all deals, up from just 38 percent in 2020. Larger deals are more likely to include a rollover component — only half of deals with headline values under $50 million had rollover. Though rollover incidence is growing, size has remained relatively steady. The average value of rollover as a percent of purchase price is now 28 percent, compared to 25 percent in the prior year. Deals with deferred purchase prices or earnouts have also become more common. Around 23 percent of last year’s deals used earnouts, up from 17 percent in 2022 and just 12 percent through the market’s peak in 2021. Earnout usage is up even within sub-verticals that have a stronger preference for upfront cash, like physician practice management. One-quarter of all PPM deals had earnouts last year, which is more than 2.5 times the number in 2021. Despite the market turbulence, seller notes have fallen further out of favor. The percentage of transactions with seller notes is now just 5 percent, less than half that of 2020, following steady year-over-year declines. Representation and warranty insurance adoption has ticked slightly higher, with 78 percent of deals greater than $50 million having RWI in 2023 vs. a 73 percent average from 2020 to 2022. Usage in deals less than $50 million continues to be relatively rare.  

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The labor market may be more resilient than you think. • The Kansas City Fed publishes a labor market momentum indicator using a weighted average of 24 labor market variables (unemployment rate, employment-to-population ratio, part-time jobs, job losers, open jobs, nonfarm payroll, labor force participation, announced job cuts, etc.), intended to provide a marker for the direction of travel in the broader labor market. • A positive value indicates that labor market conditions are above long-term average, while a negative value indicates market conditions below average. • The indicator hasn’t made a break for a meaningful negative print, which would be a recession indicator. Historically, it has given us about 2-4 quarters of notice prior to a recession. 

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What's our "WHY" at Champion Venture Partners? 1. Access! Providing athletes and athletes adjacent professionals access to the private alternatives sports asset class as a lot of their financial advisors don't play in them or even look at them. 2. Access! Providing the general public the opportunity to invest in the private alternatives sports asset class. How awesome is it that you can invest on the same terms as some of the biggest names in sports and entertainment! 3. Education! If you want to learn before you invest, we have programs and services available. 4. Partnerships! CVP are long term "forever partners" for our portfolio companies. Sure, we may have a few turn and burn VC & PE deals as that's the nature of the business, but our bread and butter is long term strategic growth value add no matter if it's a 5 year deal or a 30 year deal or a "forever deal".

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Read our latest article on Creating an Ownership Culture. This piece dives into how fostering a sense of ownership among employees can lead to remarkable outcomes for both the team and the organization. Here at KKR we are committed to providing ownership to all employees in all new controlled deals, building on recent successes of our Broad-Based Ownership Program. Whether you're a leader seeking to enhance your company's culture or an employee interested in the dynamics of workplace engagement, this article offers valuable perspectives. 👉 Read article here: https://lnkd.in/ejVc2ffd You can download the full report here: https://lnkd.in/ee_vT2rs #Leadership #BusinessCulture #EmployeeEngagement #KKR

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I think Adams Street Partners are spot on in this very thoughtful piece! · Rising interest rates are creating headwinds for buyout portfolios · Leverage reliant GP's returns are to be negatively impacted · GPs focusing on scaling via earnings growth are more likely to outperform · Sellers should rein in their valuation expectations What does this mean for PE market like #ASEAN where returns are inherently #growthdriven? Rather simplistically put, higher interests rates are levelling the playing field between Developed Markets (DM) and Emerging Markets (EM) The more returns need to rely on growth, the more regions or countries with strong GDP growth fundamentals become attractive. Granted there are many more nuances that come into play, but one could hardly argue that for the last decade+, low rates and generous leverage packages have supercharged returns in DMs. Unlevered EM businesses needed to grow earnings 3 to 4x faster than DM peers to just match the returns, quite a tall order even in booming economies. With a more "normalised" rate environment, portfolios would benefit from regionally diversified exposures to growth and we believe #ASEAN displays the most promise! #CollyerCapital #CCPL #LeveragedReturns #GrowthReturns #Buyout #interestrates https://lnkd.in/g9xDCjMY

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Reports of the Venture Capital Market's Demise Are Greatly Exaggerated "You can't raise capital right now." I hear this repeatedly. But it's all relative. In May, Pitchbook released a study (https://buff.ly/3ieuY9K ) showing that the U.S. venture market is at least as active now as it was in 2017, which itself was the most active since 2010 or so. In other words, there's a massive difference between "It's harder now than it was" and "It's impossible." But bear in mind that the VC market in 2022-3 was crazy high - between everyone scrambling to jump on digital transformation (remember when we all thought we'd be able to work from home forever?) and the mass market inflection point with artificial intelligence, there was bound to be lots of investment. Plus, we saw the uptick in the biotech space as the rapid development of the COVID vaccine forcefully proved the case for gene editing technology. Well, it turns out most of us have to be in an office at least part-time, and reality has set in with gene editing, which, while a promising technology, is a decade away from many drugs being launched on that platform. AI continues to be strong, with the markets increasingly worried that we are already in bubble territory. There was bound to be a cooling off. The venture market has also reconfigured. It is pulling back on risk and placing a priority on proven businesses over high-potential concepts. They are even willing to pay higher valuations for these opportunities. They are willing to accept lower returns that go with the lower risk. Even artificial intelligence deals are being held to this standard, though not as strictly. But if you've got a business that has some market proof in the form of customers, there's money out there, and probably at attractive valuations and terms. With this in mind, it may be the best time for you to raise money in quite some time. So, what do you do with your pre-revenue startup? You either figure out a way to make it current revenue, or you settle in for a long investor search and develop a survival plan. If your idea is great, there is still capital out there for you, but there's going to be more competition for it and fewer sources providing it. #unblakeable #venturecapital My name is Mike (Stage Name - Unblakeable) - Helping you win your best business decisions at your most critical moments. Liked this post? Want to see more? Ring the bell on my profile. Connect with me (also @unblakeable on Instagram, Facebook, and Twitter) Subscribe to my YouTube channel! https://buff.ly/3HNdUB6 Join the LinkedIn group "Unblakeable's Group That Doesn't Suck" Welcome!

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Should private markets look more like public markets? In this Citywire interview with the supremely knowledgeable Selin Bucak, we discuss the different angles of the private markets wealth push. Where should private markets and public markets intersect? I think it should intersect more in the execution and infrastructure than it should in trying to fit a "square peg in a round hole." "I'd almost want this space to think about looking more like public markets in the execution, where there's the ability to press a 'buy button' and then alternatives are a piece of a portfolio than have it look more like public markets from a product perspective where you're trying to combine private-public products, which I also think will happen." Listen to the entire interview on Citywire, link below. Alt Goes Mainstream https://lnkd.in/exKH3y3V

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IPO market insiders, while cautious, are optimistic that the current trickle of companies going public will pick up steam. I recently shared some additional thoughts on this trend with Crunchbase. https://lnkd.in/gh75AxcU #ipo #ai #startups

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Boards of Directors – How Relevant To The Business Is The Board? In 2014, activist investor Starboard Value successfully replaced all 12 directors on the board of Darden Restaurants. The following shows the Darden incumbent board at the time of Starboard's proxy fight, Starboard’s value creation plan initiatives, the Starboard director nominees and the before and after performance (revenue, EBITDA, EBITDA margin and stock price). Note especially the direct relevance of each Starboard nominee to the industry or some aspect of the value creation plan. How often do you see this level of relevance on public company boards?

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New or smaller VC, PE or HF manager? AUM less than $50 million? Great Performance? Trying to raise assets? Struggling and failing?   Sounds all too familiar: It’s due to poor or non-existent marketing Let’s get real about raising assets for “sub-institutional” managers, those with AUM between $0 and $50 million. IT’S HARD AND A STRUGGLE.   Raising assets in a crowded, hyper-competitive, complex and complicated market from investors that are risk averse, stringently selective and idiosyncratically demanding is more challenging and difficult than most new and sub-institutional managers understand. The fact is the majority of sub-institutional managers fail to get AUM beyond personal capital long with small amounts from family and friends even when they have exceptional performance. Plainly speaking: There is a lot of BS, hype, propaganda and completely wrong information about marketing and fundraising for small managers with AUM less than $50 million Since 2011, Johnson & Company has specialized in meeting the marketing challenges for "sub-institutional" managers. 25+ years experience, expertise and skill uniquely equips a new or smaller manager with the FACTS and proven structured, disciplined and focused PROCESS supported by independent high-integrity data and research, accurate information, objective insight, expert instruction and frontline intelligence that optimizes marketing process execution to maximize the success, efficiency, economy, expedience and effectiveness of raising assets. If you’re a new or smaller manager, with AUM less than $50 million struggling and failing to raise assets, first get the facts: https://johnsn.com/facts If after your review of the “FACTS”, you’d like a candid, no-nonsense conversation about marketing and raising assets, contact me, I welcome the opportunity. [email protected]

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Is Now the Best Time to Raise a Private Equity Fund? According to industry leaders, it just might be. "I’m much more optimistic at this point in the cycle in 2024 than I was in 2023 and 2022," says Andy Lund, global co-head of Houlihan Lokey's Private Funds Group. Despite expectations of a slowdown, the first half of 2024 has been unexpectedly successful for PE managers raising capital. U.S.-based funds closed on $155 billion by the end of June, slightly ahead of the first half of 2023 (PitchBook Q2 2024 US PE Breakdown). Alex Russ, head of North America for Evercore's Private Funds Group, sees this as an ideal moment for GPs with open funds. "We saw fewer new fundraise launches in 2024 than in 2022 and 2023, leading to a slight easing, which we expect to continue into the second half of this year," he notes. However, challenges remain. LP capital is still largely locked until M&A and exit activities resume. Evercore anticipates flat PE fundraising figures for 2024 compared to 2023. Moreover, other asset classes are vying for already limited institutional capital, with private credit showing particularly strong growth. In this context, Maria Konnikova’s "The Biggest Bluff" offers an insightful analogy. Inspired by "Theory of Games and Economic Behavior" by John von Neumann and Oskar Morgenstern, the book explores von Neumann's belief that poker epitomizes the delicate balance between skill and chance that governs life. Doing well at poker isn’t just about playing well; it’s about playing well relative to everyone else. And even with the best strategies, luck plays a critical role. As Nobel-winning economist Daniel Kahneman notes, "The successful funds in any given year are mostly lucky; they have a good roll of the dice. There is general agreement among researchers that nearly all stock pickers, whether they know it or not—and few of them do—are playing a game of chance." The last two years were like drawing a bad hand in poker for those raising funds. The book also emphasizes the importance of thinking like a Strategist—something I’ve honed throughout my career. Each move requires reassessment based on new information. You need a plan that evolves with feedback and supports long-term, good decision-making. If you’ve lost your chips, was it due to an unlucky situation—or because your strategy was flawed? A recurring mantra of Poker Hall of Famer Erik Seidel is "less certainty, more inquiry." If that becomes your guiding principle, not only will you actively listen, but you will also adapt and grow. For GPs, strengthening relationships with existing LPs is more crucial than ever. Now is the time to leverage your learnings and craft compelling narratives that showcase your commitment to value creation and strategic growth. By highlighting your firm's ability to navigate complex market dynamics, you can strengthen LP alignment and foster the partnerships needed for long-term success.

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Had such a great time with Melissa Gragg on The Valuation Podcast! Her wicked smart insights 🤓, useful scar tissue, and broader M&A worldview shine through in her approach to the work - so many great questions!! Click on the link and watch/listen for yourself - Useful guidance for founders in valuing their business, improving an LOI, or planning for a future sale. This one might make or save you $Millions! 💰 Maybe more!! #entrepreneur #privateequity #exitstrategy #founder #valuation

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📈🏢 Aby Rosen's RFR Holding is facing a staggering $2.5B debt bill as defaults pile up! 💥 🔎 According to a recent Bisnow article, RFR Holding, a prominent NYC real estate firm, is grappling with mounting debt and defaults. The company, led by billionaire Aby Rosen, has a portfolio of high-profile properties, including the iconic Seagram Building and Lever House. 🏢🏦 📊 The firm's debt load has surged to a whopping $2.5B, with $1.1B in loans maturing this year alone. 💸 The pandemic has hit the commercial real estate market hard, causing defaults to skyrocket. RFR Holding is no exception, with defaults on several properties, including the $200M mortgage on the Seagram Building. 📉 🗣️ "The pandemic has created a perfect storm for commercial real estate," said one industry expert. "Companies like RFR Holding are facing unprecedented challenges as they navigate this difficult time." 🌪️ 🔜 So, what's next for RFR Holding? The company is reportedly exploring options to refinance its debt and avoid further defaults. 💡 With the commercial real estate market showing signs of recovery, there's hope that RFR Holding can weather this storm. 🌞 Stay tuned for more updates on this developing story! 📰🔔 #RFRHolding #CommercialRealEstate #Debt #Defaults #NYCRealEstate

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Great piece in #PEI, there is indeed a disincentive for sharing "bad news" to investors because, in an already tough #fundraising environment it only makes the hill steeper to climb. This study also confirms the natural bifurcation between better performing "value driver" assets and the lesser ones which tend to vegetate in legacy portfolios for years and pile up in PE's aggregate #AUM year over year. They could still indeed deliver "option value" but most likely not... Because they are in fact overvalued already! #CCPL #CollyerCapital #secondaries #valuations

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In a new op-ed I penned for Institutional Investor, I discuss the changing strategic buyer landscape for enterprise software companies. With software continuing to grow well in excess of GDP, and digital transformation at the top of C-suites’ agendas, the trend of multi-billion dollar software companies being acquired by non-traditional buyers should continue to accelerate. As always, all comments are welcome!

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Saudi Arabia has invested $6.3B in sports and $230B in Emerging tech projects. Some to be presented at OwnitMiami.com Summit: - $2B in LIV Golf, with a larger investment expected for a merger with PGA TOUR that is still pending. - SURJ Sports Investment’s estimated $100M investment in the Professional Fighters League (PFL). -Acquired an 80% stake in Newcastle United Football Club for $392M - The establishment of Sela | صلة, a Public Investment Fund (PIF) -backed sports events enterprise -15 stadiums to be built rill 2030 -Neom, Trillion $ gigaproject and investment fund Att Sports Champions Shaquille O'Neal Alex Rodriguez Alexis Ohanian Sr. Jay Houston Carsten Maschmeyer Jay Chen Jay Houston Àlex Rodríguez Bacardit Yazeed AlRajhi Abdulaziz Al-Saud  

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Great analysis of recent #vc trends. Thank you Kaela Roeder and Technical.ly for including my thoughts in the piece. My "expanded" two cents below for anyone curious... It is easy to get excited by what is happening in venture capital these days given the advent of AI. However, for early-stage startups, the numbers tell a more nuanced story. Early-stage deal volume in Q4-2023 was down 66% from the peak (Q4-2021) and a quarter of the deals were down rounds. In 2024, volumes stayed fairly flat relative to 2023 levels (signalizing a normalization to pre-pandemic VC activity) and 32% of deals were down rounds in Q1 (a worsening since year end). Early-stage valuations have spiked back up this year – a pleasant boon for some founders. But, this inflation is largely driven by the excitement around AI and strong demand for capital-efficient, high-growth companies. Many startups have tried to become “dot AI” businesses overnight; however, such tactics are not the “silver bullet” to fundraising challenges and growth. With limited time and capital, funds are on the hunt for companies with bulletproof fundamentals or those with exponential growth potential. If you don’t check one of these two boxes, the VC world looks fundamentally different for you. Locally, there are some positive tailwinds. The D.C. area has outpaced other metro areas in adding AI jobs due in large part to the defense industry and an increasing number of tech companies opening-up federal outposts. Over the long-term, this will be very positive for D.C. startup growth and talent.

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