SVB Loans Uncertainty
News, insights and updates from the team at Bloom Equity Partners
Happy Friday Folks,
Welcome back to another edition of The Weekly Bloom - a must-read for investors, operators, and founders navigating the world of software private equity. We hope that you enjoyed last week’s newsletter on Tech PE Resiliency.
This week, we’ll be looking at:
SVB Loans Uncertainty
Guide to Managing an Unexpected Liquidity Crunch
Enterprise Software M&A Summary
Thoma Bravo’s Recent Podcast Launch ‘Behind The Deal’
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SVB Borrowers Face Risk of Violating Loan Covenants
For startups with funds at Silicon Valley Bank (SVB), the recent government guarantee of deposits was a relief. However, the fate of the debt they borrowed remains uncertain. While a buyer for the bank's equity did not materialize over the weekend, another auction is reportedly underway, and some expect the assets will eventually be sold piecemeal.
In the meantime, borrowers face the risk of violating loan covenants if they withdraw deposits from their SVB accounts. The ultimate buyer's decision to honor the loans is also unclear, which could further complicate negotiations for startups in breach of their loan agreements.
Although access to existing loans has resumed, the timing of a sale is unknown. Startups that pulled cash from SVB may find themselves in breach of their loan agreements, which could make negotiations with a would-be buyer more complicated.
If you are a technology company that was impacted by these events, please reply in this thread or contact our team here. The Bloom team is able to move quickly with debt and equity facilities to support management teams.
Software Operators & Founders: Guide to Managing an Unexpected Liquidity Crunch
“I have spoken with several software company founders and management teams impacted by the SVB shut down. I've worked with a few folks to put together a Google Doc which suggests actions for operators.”
- Matt Bradley, CEO at Cloud Snap
Check out the guide: here
Enterprise Software M&A Summary
In 2022, the global M&A market observed a decrease in total deal volume after reaching record-breaking numbers in 2021. This slowdown in deal activity can be attributed to a normalization of the market, as well as a return to an era characterized by increased leverage costs.
Despite the slowdown, the enterprise software market had a breaking year in terms of deal volume with an 8% increase in total transactions compared to 2021. A recent report from Hampleton Partners broke down the enterprise software M&A data. A few key findings:
Comparative to 2021, the number of enterprise software deals grew by 8%, with 1837 in 2022 compared to 1702 in 2021
The median private equity deal size remains significantly higher than strategic acquisitions at $200m compared to $45m from strategics.
In the second half of 2022, 36% of all Enterprise Software deals targeted a firm in the Enterprise Applications segment
The vast majority of deals transacted at below $100m, with only 3.5% of enterprise software deals announcing value above $100M
If you enjoyed this breakdown make sure to check out the full report👇
Enterprise Software Report 1H2023
Partner with Bloom Equity Partners
We're big fans of mission-critical IT services and software businesses with a competitive moat and a loyal, diversified, and growing customer base. Whether the business is bootstrapped, VC-backed, or a division of a larger organization, Bloom is completely agnostic to the structure.
Our Investment Criteria
Industry: Enterprise Software and Tech-Enabled Services
Geography: North America, Europe, or Australasia
Revenue: $3M - $20M (>70% recurring)
Growth: 5%+ annual revenue growth
Retention: >80% annual customer retention
Profitability: Positive EBITDA or near breakeven within 12 months
Investment Type: Operational control required
If you or someone you know is considering selling or taking investment, we might be able to help out. We also just launched our referral partner program! If you want to be compensated for sharing business leads make sure to join.
Reply to this thread and we can get acquainted!
What We’re Reading and Listening To…
March 2023 Battery Ventures State of Cloud Software Spending Report
The IPO drought could end soon—if these factors converge
Bloom Equity Partners Career Opportunity
Investing from our debut Fund, we’re actively hiring for our investment team, linked below. Reach out to careers@bloomequitypartners.com or on the specific job ad if you'd like to learn more / recommend someone for a role.
Favorites from the Ecosystem
Investors….
Operators….
Finders Program
Bloom Equity referral partners are our boots-on-the-ground referral network helping us scope out mission-critical software and technology-enabled services businesses with $3M+ in revenue who are looking for their next phase of growth.
If you know of or run a business that may be a good fit for us, submit your lead and we’ll get back to you shortly:
End Note
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