Navigating Private Capital Investment in Today’s Economic Climate: Insights from Procopio Mergers & Acquisitions and Strategic Joint Ventures Leader Jason Femrite and Elan Growth Partners LLC Managing Partner Craig Dupper

In today’s economic climate, entrepreneurs seeking private capital investment face a unique set of challenges and opportunities. Procopio Mergers & Acquisitions and Strategic Joint Ventures co-leader Jason Femrite recently sat down with Craig Dupper, Managing Partner of Elan Growth Partners LLC, to discuss the current landscape of private equity and provide valuable insights for company leaders looking to engage with private equity investors.

Dupper highlighted the impact of inflation and interest rates on the lower middle-market private equity sector, emphasizing the importance of adapting to a more challenging lending environment. He also pointed out the need for companies to focus on operational enhancements that promote growth and scale, such as upgrading the finance function and evaluating revenue and expense optimization strategies.

When it comes to capital optimization, Dupper stressed the importance of data-driven decision-making and establishing asset-based lines of credit to support working capital needs. He also discussed the potential for industry consolidation and advised private equity investors to focus on organic growth potential rather than pure roll-up strategies.

In terms of investment structures, Dupper revealed that Elan typically includes a larger seller rollover and limits leverage to less than 3.0x, with back-end equity participation tied to performance metrics. He also emphasized the importance of evaluating factors beyond valuation and cash at closing when considering a private equity partner, such as structural alignment, industry expertise, and team chemistry.

Overall, Dupper’s insights shed light on the complexities of navigating the private equity landscape in today’s economic climate and provide valuable guidance for entrepreneurs seeking capital investment. By understanding the key factors influencing private equity investments and prioritizing operational improvements and capital optimization, company leaders can position themselves for success in a rapidly evolving market.