Firm Update: December 2023

Welcome to our December Broker – Dealer newsletter. 

Below, I would like to share my view that the 2024 dealmaking prognosis is quite good.

Then, Michelle Mueller will provide compliance updates, including a reminder for our Friday 12/8 Firm Annual Compliance Meeting, and Zaya Bold will do so for collaboration.

To all of our success!

2024 – A Snapback Deal Year?

As 2023 draws to a close, boutique bankers should take solace that the pessimistic and difficult deal making conditions we have all experienced over the past 18 months are easing considerably, driven by:

  • US Interest rates have seemingly hit their peak and are on the way down  
  • In November the stock market had its best month since 2022 with the S&P up more than 9%
  • Also last month U.S. business and consumer confidence was solidly up
  • Global economies and financial markets are holding up in the face of significant geopolitical uncertainty, with as illustration Israel, Russia, and Ukraine all forecasted to have GNP growth in 2024
  • Regression to the mean analysis would suggest that after 2 consecutive years of 30%+ year-over-year drops in middle market M&A and in venture financing activity, 2024 is likely to be an uptick year.  

I would finally add my anecdotal feel, developed over 20+ years in this business, that private market dealmaking performs like the “tail of a whip” –  worse in tough times but much better in good ones.

In this spirit, here are three bullish deal making talking points to rally around for the New Year:

1. Let’s Embrace our Private Equity Asset Class.  I had the good fortune last month of attending an amazing talk on private equity returns given by Steven McCourt, Managing Principal of Meketa Investment Group.

He made the compelling case that long term private equity investment asset class returns – normally estimated at around 11% annually – might be under-measured by as much as 7 percentage points. 

Driving this gap has been extremely high fees – management fees, carried interest, transaction costs, etc. – that have traditionally characterized investments in the space.  

But as financial innovations and efficiencies reduce this fee burden, this higher return could accrue more and more, which in turn of course will only continue to drive more investor demand for quality PE deals. 

So if Steven is right, our little independent investment banking ships – if competently steered – can just ride this rising tide. 

2. Let’s Be AI Optimists.  While it remains an open question as to artificial intelligence technologies’ societal impacts, what is not in doubt is its business profitability promise.

Quite simply because of AI businesses of all types and sizes have the ability to transform their P&L for the better – via increasing HR efficiencies, making better data-driven business decisions, speeding new product development, and more… 

…which in turn should and will drive deal opportunities – financings, rollups, and more. 

3. Let’s Fall in Love Again with Dealmaking. We all work in an awesome business.  

We have as our clients some of the most talented, innovative, and powerful entrepreneurs, executives, and investors in the world.  

And our independent banking model is super low bureaucracy, time efficient, and uniquely very high margin. 

It always remains true that “just one deal” can turn a bad year into a great one, and so very often into a life-changing one.

So let’s have it all this holiday season – spend quality time with friends and family, get deals done before the end of the year, and position ourselves for a BIG 2024.  Let’s go!

Compliance Updates

Annual Compliance Meeting Save the Date! The Firm’s Annual Compliance Meeting will be held via web conference on Friday, December 8th, from 12 pm PT – 2 pm PT.  Per FINRA rules, attendance for all GT Securities Registered Persons is mandatory.

FINRA Reg CE Reminder. A reminder that effective Jan. 1, 2023, FINRA rules require Registered Representatives to complete their continuing education (CE) Regulatory Element annually by Dec. 31. 

– Michelle Mueller, Chief Compliance Officer

Platform Resources and Deals 

Deal Collaboration. We share select deals with our affiliate network via email distribution for collaboration. Please feel free to reach out to me with a deal summary to explore synergies in further detail.

Resources. As an affiliate of GT Securities, you have complimentary access to various research platforms: Family Offices Database, IBISWorld, and Hoovers & Statista.

Additionally, analyst and associate-level deal execution support is provided through Evalueserve

– Zaya Bold, Director of Banking Partnerships

Happy Holiday Season to All!

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