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Illustration: Aïda Amer/Axios

Seventy-five dealmakers and small business owners yesterday crowded into a Zoom call to be greeted by their host, who had originally planned to make his remarks in front of a live audience in Dallas. The participants, many of whom represented private equity firms and family offices, then split off into a lengthy series of 1-on-1 meetings.

Why it matters: Large-market private equity is mostly sitting on the sidelines right now, outside of some opportunistic minority deals, but lower middle-market activity remains relatively vibrant.

Details: Yesterday's event was hosted by Axial, an online deal-sourcing and transaction platform that mostly focuses on businesses with less than $20 million in EBITDA.

  • CEO Peter Lehrman says that attendance was similar to what its Dallas events normally get when in-person, and that Axial's platform is still averaging more than 500 NDAs signed per week.
  • "Lower middle-market deals are driven as much, if not more, by personal reasons than by financial ones," he explains. "Death, disease, divorce, retirement. ... It's not always about maximizing for price, which is what usually catalyzes larger deals."
  • In terms of pricing, he says that buyers are "honoring multiples of EBITDA but transferring risk into deal structures." For example, there has been an increase in earn-out provisions that often are extending into 2021.

Caveat: Deal sourcing doesn't necessarily lead to dealmaking, particularly given lead times that average around six months.

The bottom line: The lower middle-markets are changing more in terms of how they're working on deals — moving into the virtual realm — than in terms of the number of deals they're working on.

Go deeper

Aug 15, 2020 - Health

Exclusive flash poll: Parents will lean on family members for help

Illustration: Eniola Odetunde/Axios

Parents expect to rely on family members to help babysit, tutor or tend to their children's needs in the fall as they try to juggle competing demands and uncertainty, according to a flash poll of 310 U.S. parents who are part of an Ipsos-run community panel conducted Aug. 10-12.

The big picture: Parents are facing another semester of tackling the superhuman task of managing virtual education from home while also working.

Why learning pods aren't a panacea for remote learning

Illustration: Aïda Amer/Axios

Pandemic learning pods — also called microschools or co-ops — are popular options for parents looking to fill in the academic and social gaps for children who will be learning virtually come fall.

How it works: Across the country, groups of parents are pooling resources to hire a teacher, tutor or child care professional to preside over a small cohort of students, direct their studies and provide general supervision so parents can work.

Remote school's strain on students with special needs

Illustration: Eniola Odetunde/Axios

The pandemic's disruption of in-person instruction is especially difficult for the seven million U.S. students with disabilities and other special needs and their families.

The big picture: The sudden and sustained switch to online learning is straining already under-resourced special education providers — and could lead to even steeper learning loss among a vulnerable student population, experts say.

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