Prediction #2 of 5: “Private Equity Investing will be vibrant in the Southeast”

By John Yates & David Calhoun / Corporate Technology Group – Morris, Manning & Martin, LLP

We’ve just completed a strong year for technology companies in the Southeast with the wind at our backs moving into 2017. Our law firm closed more than 50 tech M&A and growth equity/venture capital financings in the last 12 months, so we’ve witnessed a number of entrepreneurial successes in 2016.

Optimistic 2017 for Atlanta/SE Tech — Heading into the new year, the unknowns are greater than ever, but if the momentum continues, it’s realistic to predict another very strong year for technology entrepreneurs in Atlanta and the Southeast. In light of our deep involvement in the Southeastern tech market, we wanted to share with you a series of predictions for 2017.

Here is the second of our Top 5 Predictions in 2017 for the Atlanta/Southeast Technology Community:

Prediction #2: Private Equity Investing will be vibrant in the Southeast

All indications are that we will have an active market for private equity (PE) deals in 2017 in our region. According to data from a fund placement agent, there were $1.4 trillion of available PE funds in 2016 (compared to $1.3 trillion in 2015). With the demise of IPOs in the Southeast (and despite the recent strong performance in the stock market), private equity generally outperformed public markets in 2016. As a result, investors continue to pour money into PE funds. We’ve seen existing firms raise new and larger funds as well as the birth of many new PE funds during the year. A recent survey by a PE monitoring group indicated that three-quarters of investors intend to increase or maintain their target allocation to PE over the next 12 months.

Growing tech companies in Atlanta and the Southeast should be beneficiaries of the increased availability of PE funds. In the past, Southeastern entrepreneurs struggled to survive from the lack of venture investing after the great recession of 2008. The result was the ascension of bootstrapped tech companies that fought through the lack of financing to build profitable companies in the $10-50 million revenue range. Consequently, these companies are now attractive targets for PE investors, many of whom have a keen interest in establishing a foothold in the Southeast.

As further evidence of this positive trend, we’ve worked with some of the largest PE firms in the US and have seen them replenish their war chests during the last 18 months. As a result, they have capital to invest in 2017 and continue to actively seek companies in our region. Additionally, although it’s difficult to predict the impact of rising interest rates as well as the political climate, debt financing continues to be available for transactions. This source of financing provides even more capital for PE transactions.

2017 Prediction: Optimistic outlook for established tech companies in the Southeast with improving opportunities to attract private equity investment.

John Yates and David Calhoun are partners in the Corporate Technology Group of the Atlanta law firm of Morris, Manning & Martin. The firm represents leading technology clients and entrepreneurs throughout the Southeast and also hosts the SE TECH Podcast series interviewing leading start-up & fast-growth tech companies in the Southeast region.


John Yates: Email | LinkedIn

David Calhoun: Email | LinkedIn

This column is presented for educational and informational purposes and is not intended to constitute legal advice.