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Alternative Market Briefing

Private markets withstand macro pressure

Friday, June 10, 2022

Bailey McCann, Opalesque New York:

New data from investment bank Lincoln International companies are showing signs of distress but private markets are still showing some signs of resiliency.

According to a recent survey of approximately 100 alternative asset investment professionals conducted by Lincoln International, approximately two-thirds of professionals believe that private company enterprise values will decline by the end of 2022. Approximately 60% of respondents cited macroeconomic issues, like inflationary pressure, supply chain constraints, and labor shortages, as primary concerns impacting their investments.

The primary concern appears to be how costs will be handled going forward. In the first quarter, Lincoln International observed that approximately 79.3% of private companies experienced year-to-date revenue increases, whereas only 60.5% of private companies experienced year-to-date EBITDA increases. These trends, which have persisted over the last four quarters, highlight private companies' challenges to pass on price increases to their customers.

"Through the first quarter of 2022, private companies were largely able to pass through price increases to their customers with limited pushback, but as inflation continues to mount, consumers are faced with a choice of where to spend their dollars," said Ron Kahn, Managing Director and Co-Head of Lincoln International's Valuations & Opinions practice. "As we are well into the second quarter, we are ......................

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