LBO firms will rescue overvalued 2021-era startups
High-quality software companies that raised capital at inflated 2021 valuations will increasingly find exits through private equity buyouts rather than IPOs.
The argument
The guest argued that while companies like Snyk, Miro, and 1Password are great businesses with strong ARR, their legacy valuations make public markets difficult, making them prime targets for LBO firms like Thoma Bravo, Vista, Blackstone, and KKR.
The thesis, stress-tested
✓ What validates it
- ✓An increase in take-private or private-to-private M&A transactions by major PE firms
- ✓SaaS companies reaching profitability to facilitate debt-funded buyouts
▸ Risks discussed
- ▸Valuation write-downs for late-stage venture backers
- ▸Founder and employee demotivation due to flat or down exits
Hear it yourself
"I think it's probably a good time to be in the the LBO business. I think it's probably a good time to be in the Thoma Bravo, Vista, Blackstone, KKR business. There will be homes for a lot of those companies, you know, who get themselves to a sustainable place and they will find homes."
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