Matt Reilly

Get ready for one of the biggest IPOs since COVID. Lineage is expected to raise $3.85 billion this month. As Bloomberg put it, "Aside from a handful in 2020 and 2021 when the pandemic disrupted travel, only three companies in the past decade raised more than $1 billion on US exchanges in July." This is big news for the largest and fastest-growing consolidator in cold chain logistics. Kudos to Greg Lehmkuhl, Kevin Marchetti, Adam Forste and all involved! #logistics #supplychain #coldchain #IPO https://lnkd.in/eKj3UjvY

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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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April’s weaker Consumer Confidence report adds to the growing discussion of stagflation. Consumer do not appear to be fearing a repeat of the 1970s, however. We may see a low altitude stagflation. Job and income growth will moderate, while inflation remains persistently high. This backdrop would make it difficult for the Fed to lower rates this year. We are reluctant to embrace the stagflation theme, particularly since we are projecting 2.9% growth in the second quarter. We do expect growth to slow in the second half of this year and look for job growth to taper off over the next few months. We are looking for two quarter-point cuts in the federal funds rate this year, the first in July and second in December. We have also penciled in two quarter-point cuts in the first half of 2025, after which we expect the Fed to hold rates steady for some time.

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⚖️ "What if you could double your case-handling efficiency with one system? Jon Groth tapped into the Entrepreneurial Operating System (EOS) to revolutionize his process. 🛠️" 📈 Key Takeaways: Streamlined weekly meetings Efficient resource management Multijurisdictional insights 🛤️ Facing operational roadblocks? Jon’s insights could be your roadmap to a more efficient practice.

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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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High Impact PortCo Leaders Helping PE Sponsors Achieve EBIDTA Targets As seen in Hunt Scanlon Media's recently released 2024 Private Equity Recruiting Report, Tim Tolan, founder, executive chairman, and managing partner, and Tim Russell, head of business development and managing partner at The Tolan Group, sat down with our editors to discuss their longstanding role as #talent advisors to private equity (PE) firms, and how they have always embraced a consultative approach. "Typically, we provide #portco talent from the director level to the C Suite as well as individual contributors depending on the clients’ talent needs," said Mr. Tolan. "We place CEOs and CFOs on a regular basis but in most cases, we are called on time and time again when there is a need to upgrade talent for a given role. It’s not uncommon for us to be asked to build the entire team across a given platform. One example comes to mind for one of clients where we completed 15 search assignments including directors and VP level roles over the course of 18 months. As the platform continued to grow, they needed more expertise and talent to support their #growth." To read more, and download the full report, please visit: https://lnkd.in/efMupGRk

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#PE An interesting trend, which I’ve highlighted a couple times now, is that while private equity’s new investments and exits have declined by 60% and 66%, respectively, since 2021, fundraising remains near its peak 2021 levels, creating a tricky situation where funds are raising more money from investors than they are distributing https://lnkd.in/d3yimbdX

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As anticipated, the Federal Open Market Committee (FOMC) unanimously decided to maintain the federal funds rate at 5.25-5.5% during their July meeting. This decision aligns with market expectations amidst moderating inflation and decelerating job growth. Balance was a critical theme in the Fed’s policy statement and Powell’s press conference. The language in the policy statement was updated to reflect a focus on risks to both sides of the Fed's dual mandate—price stability and full employment—moving away from the earlier singular focus on inflation risks. The decision to hold rates steady likely reflects a compromise within the committee. Dovish members, encouraged by progress on inflation and a cooling labor market, might have supported a rate cut. Meanwhile, hawkish members, cautious due to previous missteps, prefer to await more data before making further moves. ⚖️ Please take a look at our take on the Fed's latest decision and subscribe to our reports. #FederalReserve #FOMC #EconomicUpdate #InterestRates https://lnkd.in/eJvBXXmT

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#Duediligence in #PE stays in a few core areas, from Quality of Earnings to #IT to Human Capital and market study, but how closely does it align and drive #valcue creation planning?https://ow.ly/cX1150QqEaC

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I really enjoy the conversations that I have with #aec executives. Today I was having a conversation with the CEO of an Engineering firm. I was giving my views of Private Equity and how for many firms that sell to PE may be doing so for a liquid event and that they don’t see their firm growing. Essentially, they are selling their interest in their firm and then likely allocating to the public markets. It could mean that on a risk adjusted basis they have more confidence in the stock market than their own company. However, there can be a hybrid approach. If you look at what physicians have done. Their obstacle to growing their practices is being able to recruit more Doctors. So what they have done is split their business into Primary Care and Urgent Care. Primary care is smaller and more bespoke to deal with a myriad of patients. This is run with a high Dr-PA-Nurse ratio. The Urgent Care business is like a retail operation that deals with the colds and sniffles crowd. Rarely a Dr to be found and run by PA and Nurses. It is a highly operational model that scales well. By bifurcating the businesses, the medical industry has created a product that PE loves and they have kept the business that they have no interest in owning. Instead of selling all of your AE firm to PE, maybe carve out the operational, high repetition work to PE and keep the other stuff. Use that capital to fund innovation in the business and then rinse and repeat. Your core business is to incubate and spin out the commodity business to PE. I have also seen this with Medical Transport, Vets and Dental Spas.

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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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Expect Higher-for-longer Interest Rates, Fed's Bostic Says Barron's Atlanta Federal Reserve President Raphael Bostic expects to hold interest rates steady for the long haul, noting that a return to the central bank’s 2% annual inflation target could be a way off. 

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PE - Investing in AI Infrastructure KKR inks a $50 Billion strategic partnership to support AI Growth - data centers and power generation: - "Advancements in AI are fueling an unprecedented demand for data centers, but a limited availability of reliable power is impeding the strategic goals of the world’s largest technology companies, enterprises, and governments looking to deploy AI." - "U.S. data center demand is projected to nearly triple by 2030, driving over $1 trillion in investment." - "A single planned data center campus regularly exceeds 1 gigawatt (GW) of power demand and requires an investment of $15 billion or more across data center and power equipment." “Data center power demand is expected to grow by 160% by 20302, a demand that will go unmet without the right infrastructure in place, which is critical to boosting productivity, supporting electrification and helping countries create a competitive edge in AI.” - Joe Bae, Co-CEO, KKR Source: https://lnkd.in/espxbiqt --------- #ai #pe #privateequity

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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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Buying companies sounds very transactional but the art of the deal is the employees, particularly at the $2-5M EBITDA size. Taking the time during diligence, and beyond, to truly understand the people that make the product (your IP), the people that take care of your customers (your revenue), and the people that hold your vendors accountable (your expenses) is the difference of a successful transition and a not successful transition of ownership. Particularly when you look at #founders of #americanmanufacturing companies.

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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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Some great insights from Jason Calacanis at yesterday's Austin Tech Week regarding venture investing; ' Surface area (broad diversification) is important early (seed stage), concentration is important in later rounds.' Couldn't agree more. Read the piece below to see why...and how.

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