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The Private Equity Hangover: What B2B Founders Need to Know About the $3.6T Exit Logjam
- PE firms are facing a liquidity crisis, with a record 29,000 companies worth $3.6 trillion waiting to exit through IPOs or acquisitions, impacting B2B and SaaS founders.
- The current environment marks the end of the easy money era, with limited partners backing Private Equity in hopes of successful returns, exemplified by Thoma Bravo's recent fund.
- Factors including interest rate hikes, tariff uncertainty, and valuation gaps have led to the logjam in exits, forcing companies to wait and affecting acquisition activities.
- Strategic buyers now hold more leverage due to PE firms' urgency to exit, emphasizing the need for operational excellence and sustainable growth for B2B companies.
- Thoma Bravo stands out for its continuous acquisitions, focus on fundamentals, and conviction in software businesses with strong moats and clear optimization opportunities.
- SaaS founders are advised to build for strategic value, master unit economics, diversify revenue streams, prepare for longer sales cycles, and consider alternative exit strategies.
- The resolution of this logjam is expected to take time, possibly 12 to 36 months, with interest rate cuts potentially expediting the process but not to the extent of a return to zero-rate environment.
- Despite the challenges posed by the PE hangover, B2B founders have an opportunity to shine by showcasing operational excellence, strategic value, and sustainable growth for premium valuations.
- The shift towards sustainable, profitable growth highlights the importance of fundamental business principles over chasing quick exits, emphasizing the enduring value of sound business strategies.
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