Welcome to our July Broker – Dealer newsletter!
First, we will share some thoughts on YTD deal activity and the current market climate.
Then, we will provide an exciting fund marketing webinar invitation.
To all of our success!
What is Happening Out There?
Over the past month, we’ve seen both improved sentiment and activity in the deal market as a whole, along with a notable increase in new mandates and deal closings on our platform.
This recent uptick has led platform deal activity to catch up to last year, with 205 new platform mandates and 23 closings YTD, compared to 135 and 21 in 2023.
And there are some very bullish deal market indicators starting to percolate, including:
Regulatory Easing: The increased probability of a change in political administration next year would most likely mean a significantly more pro M&A stance from the Federal Trade Commission (FTC).
Bluntly, the current FTC has been one of the most M&A adverse in history. They have challenged and slowed deals not just in their traditional “Big Tech” and “Big Pharma” lanes, but bizarrely even in markets like affordable handbags and worryingly have threatened to start reviewing even smaller deals not traditionally under their purview.
This regulatory overhang has, I believe, been a contributing factor to some of the malaise and pessimism we have all felt in the middle market deal marketplace for now going on 2 ½ years.
Adding to hopes for a potential easing is the Supreme Court’s recent Chevron case ruling, which over the medium term could help in a meaningful way toward a return to a more pro-business and pro-growth economic environment.
Whatever happens with the election, the old market adage of ‘buying the rumor and selling the news’ suggests that the remainder of the year could see buyer appetite and seller desire better aligning, making it easier to get deals done.
Public Markets and Interest Rates. The S&P through the 2nd quarter was up 16.32% and is well on track for its second straight year of solid uptick (the S&P was up 26.29% in 2022).
The combination of solid public markets plus what is now a full year of moderate inflation creates a “solid enough” macro environment for private market deal-making.
And the prediction here is that aFed interest rate cut – more likely than not between now and the end of the year – will give a firm nudge to all of that PE capital sitting on the sidelines to actual work.
Regression to the Mean. My 20+ years of experience in independent investment banking has taught me that deal activity more often than not just reverts to the mean.
We had record-breaking deal years in 2020 and 2021, and now these past 2 ½ years have been solid but below trend.
So we are due for some better deal markets! Of course it is up to us to make it happen but a bit of tailwinds never hurts.
So let’s all go get it!
Fund Marketing Webinar. On Thursday, July 25th at 10:30 am PT, we are excited to host an informational webinar with principals from the InvestX Fund.
InvestX is a leading cross-border pre-IPO investor offering access to private equity deals that, for many decades, were exclusive to a limited investing population. Launched in 2014 with a mission to bring transparency and trust to the private equity market, InvestX delivers access, liquidity, and innovation to the private equity asset class through investments in Late-Stage Private Equity.
It is a presentation and opportunity not to be missed, so register today Via This Link!