Watch: A conversation on the current private equity landscape

On Wednesday, May 24, Axios technology and business reporter Kia Kokalitcheva and business editor Dan Primack hosted conversations examining the economic headwinds impacting the private equity landscape, tech investing and lending. Guests included Thoma Bravo managing partner Seth Boro and Battery Ventures general partner Morad Elhafed. The View from the Top sponsored segment featured Cooley partner Al Browne.

Seth Boro explained how the rise of generative AI is manifesting in the world of private equity and how the markets are responding to slowed investment.

• On generative AI: “It is very hard to have a discussion, even in our world, where the topic doesn’t come up, and it’s a big area of focus in our portfolio right now. We have a large portfolio of enterprise software companies, mainly selling B2B software. And certainly at every one of those companies, generative AI is a topic that management teams are working on figuring out.”
• On investments in cybersecurity: “What we see today in corporate IT budgets is that cyber is still an area of heavy investment, it’s still an area of growth today. And we continue to think that it’s going to be very resilient, even in the light of potentially some other areas that might be slowing down as people think about where they need to invest.”

Morad Elhafed discussed how he is finding opportunities in today’s market and how valuations have shifted for many companies over the last few years.

• On the current environment for buyouts: “We’ve had free capital for a very long period of time, and that’s come to an end. And when capital becomes more expensive, people make decisions differently…a lot of money went into the system, a lot of companies were created, maybe more than you’d expect in normal times. And when that all came to a halt last year or two years ago, it’s created some interesting opportunities for companies like ours or a firm to find dislocation in the market.”
• On the wave of companies that went public via SPAC: “A lot of these companies would have never been public, so SPAC was one way for a lot of companies to access public markets where they didn’t have the traditional path to get there…not all of them are durable businesses, many of them are trading well below where they went public, and many of them should probably still not be public these days.”

In the View from the Top segment, Al Browne highlighted broader industry trends in the market surrounding the private equity investing slowdown.

• “We continue to see an emphasis in the private equity space on technology. Last year, approximately a third of the total buyout capital deployed was in the tech space. And as I indicated, the swings in valuation in the technology sector have really had sort of an impact on dealmaking generally. As private equity firms have focused on tech, they continue to need to find ways to partner with management and focus on growth to drive returns.”

Thank you to Cooley for sponsoring this event.