We are in uncharted territories given the impact of the Pandemic at many levels ranging from our physical health to the mental challenges brought to bear on each of us to the significant impact on our economy.

Venture Funding  

In the first quarter of 2020, companies in the region raised 227 million in venture capital, according to the  PwC/CB Insights MoneyTree Report.  This funding went to 21 companies over this period and over $50 million higher than the quarterly average from 2019.   Zerofox raised $74 million, which was the third-largest round secured by a cyber company in this country.

There was over $121 billion in dry powder amongst the Venture Funds in 2019, and they continue to fund, but many are being more conservative in their approach.  I spoke to Chuck Cullen at Grotech Ventures about their philosophy last week – they have two investments they were focused on.  One was just funded the other was put on hold in the near term.  Speaking with numerous funds, their focus has primarily turned to their existing portfolio companies, ensuring companies have enough cash runway and stressing efficiency. New deals are still happening, but most of these had already been in the pipeline prior to the onset of the Pandemic. The investment pace will surely slowdown in the near term.  One Venture Fund I spoke to was working through new deal screening protocols.  How do you connect with the founding teams before making an investment?   The old axiom is that you invest in an “A” management team is still quite true.  They were trying to derive a technology solution to measure management teams while travel has all but ceased.

Valuations may not have retreated much yet, but indications from Venture community and startups alike suggest that valuations are likely to be challenged in the coming quarters.  Late-stage valuations may see valuations impacted more so after reaching record highs in 2019.  Historically, investor early-stage deal values tend to be more range-bound and may be affected less.

Private Equity [Read more…]

You would have to be completely unplugged from the media if you have not seen multiple headlines over the past few years profiling mergers and acquisition activity at record levels and record valuations.  According to the Institute for Mergers, Acquisitions and Alliances, United States M&A volume as measured by transaction value was over $1.9 Trillion in 2018 up from almost $1.8 Trillion in 2017.  Year to date through May, 2019 there was approximately $800 Billion in transaction value.  2018 Middle-market M&A volume in the U.S. hit $427.9 Billion up from $372.7 Billion in 2017.

Valuations are experiencing record levels as well.  U.S. private equity backed buyouts were executed at an average EBITDA multiple of 11.6x in 2018, down a bit from the 11.9x multiple in 2017, but still above the average post-financial crisis multiple of 9.9x (2010 – 2016).

Unprecedented liquidity is driving all this activity.  A few anecdotes:

• Private capital dry powder is approximately $2 Trillion;
• Private debt funds (non-bank, private lenders) have over $300 Billion of dry powder; and,
• Corporate America is holding almost $1.7 Trillion of cash.

Working with middle-market companies, our investment banking teams at Evergreen Advisors Capital are consistently interfacing with private equity and strategic buyers and our activity levels and outcomes are reinforcing the statistics and anecdotal evidence – It is a great time to be a seller.  Across several industries such as business services, software, healthcare, cyber,  government contractors, and diversified industrials, we are seeing strong, consistent interest in our sell-side mandates from both financial and strategic buyers.  That being said, it is not a one size fits all market. To ensure success and best manage time and resources, entrepreneurs considering liquidity alternatives need to access and evaluate the appropriate audiences for their particular fact pattern.

Scale continues to be a factor in generating interest from strategic buyers.  During more than one sell-side engagement, we have seen potential strategic buyers show initial interest in a target only to back away when a higher priority (i.e. larger target) opportunity became available.  Even though we found other buyers, the message has been clear that corporate America’s human resources are constrained when it comes to M&A causing transaction timelines to stretch a bit.  We have been successful in guiding middle-market companies that may be sub-scale to larger strategic buyers, in generating interest from smaller strategic buyers that are backed by private equity.  In almost all of these PE-backed strategic transactions, we encountered a counterparty that was able to act quickly and decisively, generating a great outcome for our client. [Read more…]

Evergreen Advisors Capital, a middle market Investment Bank is pleased to announce that it has been named a 2019 Moxie Award finalist. The Moxie Award program honors the accomplishments and achievements of growing businesses, nonprofits, and associations in the DC metro community. Organizations are recognized for having demonstrated boldness and innovation as an integral part of their growth strategy.

“I want to congratulate our team for being nominated as a Finalist for the 2019 Moxie Award enabling us to be recognized among the boldest and most innovative organizations in the D.C. metro community” Rick Kohr, Chief Executive Officer said. Our team has a proven track record in providing innovative and strategic solutions to meet our clients’ evolving business needs and implementing winning strategies for our clients.”

Finalists were recently announced by Sarah Cody, the 2019 Moxie Award executive chairwoman.  “We received an unprecedented number of entries,” Cody said. “We look forward to revealing the winners at the 2019 Moxie Award celebration on Nov. 5, 2019, at The Ritz-Carlton in Tysons Corner.” [Read more…]

Evergreen Advisors Capital is pleased to announce the publication of our Q1 2019 Digital Health Market Update. The update provides industry and insights on notable transactions, a detailed look at M&A and private placement activity, and data on valuation metrics and stock price performance.

Read More or Download here:

Digital Health Market Update Spring 2019

Evergreen Advisors Capital, a middle-market investment bank, is pleased to announce that Global Technology Associates, LLC (“GTA”) has been acquired by Kelly Services (“Kelly”).  Evergreen Advisors Capital acted as the exclusive financial advisor to GTA. Lacki & Company, LLC provided legal advice to GTA.

GTA is a leading provider of high-value engineering, technology, and business consulting services to the telecommunications industry – assisting clients with maximizing infrastructure potential and evolving networks and services to address market opportunities.   Bridging the gap between business and technology, GTA provides a wide range of services tailored to address client needs across the telecommunications value chain – from the network edge to the network core, and the enabling technologies being developed and deployed to deliver next-generation services.

“We explored several strategic alternatives to address our future growth opportunities. Kelly’s brand recognition and size support GTA’s growth objectives,” said Farzad Ghassemi, Executive Chairman of GTA, “The partnership with Kelly is a great outcome for our employees and clients. ”

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Evergreen Advisors Capital is pleased to announce that it was the exclusive financial advisor to Four V Systems LLC, an SRC Company, and cybersecurity firm in connection with its sale to OPAQ Networks.

FourV Systems, located in Baltimore, MD, is dedicated to helping organizations manage business risk aligned with IT operations. risk.  OPAQ Networks is the premier network security cloud company that enables partners to deliver security-as-a-service to midsize enterprise customers. OPAQ Networks’ cloud-based platform empowers organizations to simplify security management, centralize policy enforcement, and reduce costs. Based in Northern Virginia, OPAQ is privately held and is funded by Columbia Capital, Harmony Partners, and Zero-G, Inc.

Terms of the transaction were not disclosed.

 

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