Bain & Co spots tech ‘buyer’s market’

We’re opening with a look at a new report on the tech sector by Bain & Co, focusing on why Bain believes that a buyer’s market is coming for the industry.

Next, we have an exit as Livingbridge sells a digital media agency to Falfurrias Capital Partners.

We then switch to insurance, where CVC Capital Partners has invested in an underwriting business, before we learn of a new office launch and hires by Inflexion Private Equity Partners.

Sport rounds out the day, as we take a brief look at 777 Partners’ acquisition of an English football club as well as a look back at our coverage of a report on the sports sector from July.

Buyer’s market

I’ve been taking a look at Bain & Co’s Technology Report 2023, freshly released today. As you might expect, artificial intelligence features prominently – the time to “wait and see on AI” is over, according to the authors.

But I wanted to focus on another of the chapters: A Buyer’s Market is Coming for Tech Assets.

Like dealmaking generally, tech deals have slowed since mid-2022 for all the reasons we talk about in the Dealflow – limited access to debt, rate rises, valuation mismatches and so on. That’s also been true of exits, said the report, leaving firms holding on to tech companies for longer than they have in years.

“This backlog of long-held portfolio assets is growing more quickly than the mountainous level of dry powder that is holding steady, which will create a buyer’s market when activity picks up,” the report read.

It added: “With multiples trending downward and a competitive market on the horizon, investors should focus on adding value to existing assets by growing earnings, redefining operational processes that may have been ignored for a while, raising efficiency with new tools, and seeking new areas of growth.”

I’d love to hear your outlook on the tech sector – send me your thoughts at craig.m@pei.group

Logging out

Sticking with exits, and Livingbridge has sold Brainlabs, a digital media agency, to Falfurrias Capital Partners.

Livingbridge first invested in Brainlabs in 2019.

The firm supported Brainlabs through eight acquisitions and growth into new markets, including expansion in the US, according to a release.

During Livingbridge’s investment period, Brainlabs’ turnover increased from £12 million ($15 million; €14 million) to £90 million. The company also grew from 206 employees to 850 at present.

Insurance

We’ve seen some action in the insurance industry of late, including Pollen Street Capital and Bain Capital Special Situations funding a merger between Markerstudy and Atlanta Group that values the latter at £1.2 billion ($1.5 billion; €1.4 billion).

Another firm announced this morning that it is investing in the sector.

CVC Capital Partners, via its Strategic Opportunities Fund, will acquire a majority stake in Dale Underwriting Partners, an independent, owner-managed underwriting business.

The firm will provide capital to replace the current third-party capital providers and support business growth, according to a release.

“The speciality insurance and Lloyd’s markets are attractive markets for patient capital investors like CVC funds and a focus for our financial services strategy,” said Martin Iacoponi, MD at CVC.

Dale, which operates through Lloyd’s Syndicate 1729, is based in London.

Heading north

Inflexion Private Equity Partners has opened a new office in Stockholm covering the Nordic region.

Partner Henrik Nordman will be responsible for Nordic investments.

Inflexion has appointed Petter Svensson as investment director and John Persson as investment executive and both will join the Nordics team. Svensson joins from Bridgepoint and Persson joins from Bank of America.

The Nordic team will work with Inflexion’s sector teams and global network to identify new investment opportunities across the region, according to a release.

Pitch deal

On Friday, 777 Partners agreed to acquire Everton Football Club, in the latest move by a US private equity firm for a European team. You can read more about that deal here, but for more on some of the financial figures at the heart of private equity’s interest in sport, check out our analysis of a recent SportsBusiness report in this Dealflow from late July.