After meeting in graduate school at MIT, Michael Manapat and Yibo Ling embarked on different career paths. Manapat held chief technical roles at Stripe and Notion, while Ling led finance teams at Uber and Binance. Still, they both confronted a similar challenge: How to assemble fragmented data to make important decisions about capital allocation, workflows and more.
When OpenAI released ChatGPT in November 2022, Ling tested to see how well it could carry out basic due diligence tasks. He quickly found the new AI tool was hampered by a familiar problem: Data. “Clearly there was a lot of promise, but it just wasn’t working. You need the right information in the right context,” he told Fortune.
That realization motivated Manapat and Ling to join forces to build Rowspace, an AI platform that allows financial outfits like private equity firms and hedge funds to turn their years of proprietary data into alpha. The company is publicly launching today with a $50 million funding round led by Sequoia, with participation from Emergence Capital, Stripe, and Conviction, along with other firms and angel investors.
At a time of pearl-clutching and market turmoil on whether large language models and foundation models will render software obsolete, Sequoia investor and co-steward Alfred Lin told Fortune that Rowspace is a prime example of the type of application that will thrive in the brave new AI-empowered world.
“The thing that people are talking about is the marginal line of code is very cheap to produce,” Lin said. “What we’re looking for now in almost every single company is product velocity, and how fast product velocity generates other things that become moats, which are like network effects and people using your product on a daily basis.”
Finding alpha
Manapat described Rowspace as the intelligence layer that sits on top of a firm’s data. The platform integrates all of an institution’s structured and unstructured data, whether in the form of documents or accounting systems or old PowerPoints, and performs reasoning in advance. “We’re focused on how we make sure we understand all of the underlying data to drive actual decision-making,” he said.
Rowspace’s approach to data sounds a lot like the one used by popular new consumer tools such as Claude Cowork, which can query a computer’s files and create presentations or research memos. Manapat said that Rowspace is different in crucial ways. For one, it doesn’t take possession of a firm’s data, instead doing processing inside its own cloud systems.
On a deeper level, Manapat said that foundation models like Anthropic are good at last mile tasks, like formatting a pitchbook in PowerPoint or building a cash flow model, which are generally completed with a real-time search approach.
“That’s not where our focus is,” Manapat said. As he explained, there are no ways to ensure the agent looked at all available information or took the time to reason in advance of making a conclusion, which is time-consuming and expensive. Instead, Rowspace is tasked with deeper analysis of data, such as being able to notice minute details from years of a company’s finances. That will always give the platform an advantage over the more general purpose Anthropics of the world.
“The foundation model is not going to be able to cater to every single [thing] that someone wants to do in all these different industries,” said Lin. “That is going to be left to players like Rowspace, specifically for the vertical they’re focused on.”
Manapat admitted that pure software or user interfaces are going to be hard to defend, especially as foundation models rapidly advance. But he said that’s why Rowspace’s focus is more on compiling and synthesizing a firm’s data in a secure way, and doing so with a financially literate team. The engineering corps comes both from tech-first companies like Notion and Stripe as well as private equity and credit. “There’s no one size fits all solution in financial services, because in some sense, each firm’s alpha comes from their approach,” Manapat said. “We’re trying to help you learn from your own data and knowledge and approach and amplify that.”
While Rowspace declined to name its valuation or early customers, Manapat said that they include longstanding and name-brand private equity and credit firms, as well as crossover firms that work in both public and private markets. He added that Rowspace is working with about ten top firms with seven-figure annual contract values.
“Customers use this tool to make money, and that’s where the rubber meets the road,” Lin said. “If we consistently, with our tool, help people use AI to make better decisions, they will make money, and they’ll do it better than others.”
Patrick Finnegan began his career as an entrepreneur while struggling to fit in at a Delaware boarding school. He started businesses as a way to cope (some above board, like building websites, and some less so, like selling fake IDs). He dropped out after hearing about the Thiel Fellowship, which awarded $100,000 to fellow dropouts under 22 years old. Though he didn’t make it to the finalist round after traveling out to Las Vegas, he remembers seeing Lucy Guo and hearing about Dylan Field, who had founded Figma. Finnegan decided to follow a similar path, moving to New York to start a budding startup career and meet other young people across the city’s tech and art scenes.
Finnegan earned a smattering of headlines as a precocious 19-year-old wunderkind before going mostly under the media radar. But he’s been productive over the past decade, gaining a name through putting together special purpose vehicles and venture funds that became early backers of buzzy projects. One, the prebiotic soda Poppi, completed an acquisition with Pepsi for nearly $2 billion last year. But where Finnegan has built his reputation is as a connector: the type of amorphous yet essential investor who knows someone who knows someone who can turn a little-known product into a cultural phenomenon. For Poppi, Finnegan facilitated an intro to the manager of Post Malone, who became one of the drink’s most high-profile ambassadors. “He just knows everybody,” Poppi cofounder Stephen Ellsworth told me. “That is Patrick’s superpower.”
That may not seem like the foundation for a successful VC firm. Still, in today’s impossibly saturated attention economy—where every new product seems to have an A-list celebrity as an investor or spokesperson—finding authentic boosters is a hot commodity. It’s also why Finnegan partnered with Chris Hollod to build Second Sight Ventures, which is announcing the close of its $75 million first fund. Like Finnegan, Hollod built a career out of the celebrity-driven investment paradigm. Through his role as the managing partner at Ashton Kutcher’s A-Grade Investments, he really pioneered the model, though he started the firm around when Finnegan was still in middle school.
Now, the two are finding early-stage opportunities in a category that Finnegan describes as “tech companies that also have a cultural edge.” Investments for the firm have included the Kardashian-backed supplement brand Lemme and the Mario Carbone-backed restaurant software startup Loyalist. “We’re really just making sure that we’re investing in businesses that know how to tell good stories,” Finnegan said. “And then helping them amplify and tell better stories.”
I asked whether Finnegan, now knocking on the doorstep of 30 years old, is worried about losing his edge. “Just being a student and knowing my place and just being a sponge,” he said, echoing his early experience trying out for the Thiel fellowship. “I don’t want to be the smartest person in the world.”
Joey Abrams curated the deals section of today’s newsletter.Subscribe here.
VENTURE DEALS
– Pepper, a New York City-based developer of ecommerce technology for food distributors, raised $50 million in Series C funding. LeadEdgeCapital led the round and was joined by existing investors.
– Ownwell, an Austin, Texas-based property tax savings platform, raised $30 million in funding. AlphaEdison and MercatoPartners led the round and were joined by IntuitVentures, LeftLane Capital, FirstRoundCapital, and others.
– Inscope, a San Francisco-based AI-powered financial reporting platform for companies and accounting firms, raised $14.5 million in Series A funding. Norwest led the round and was joined by StormVentures and existing investors.
– Potpie, a San Francisco-based agentic AI platform designed to work across large codebases, raised $2.2 million in pre-seed funding. EmergentVentures led the round and was joined by All In Capital, DeVC, and Point One Capital.
EXITS
– RevSpring, a portfolio company of FrazierHealthcarePartners, acquired TrustCommerce, a Chicago, Ill.-based health care payment and security platform, from Waud CapitalPartners. Financial terms were not disclosed.
FUNDS + FUNDS OF FUNDS
– PeakXV, a Bangalore, India-based venture capital firm, raised $1.3 billion for a new fund focused on AI, financial tech, and consumer sectors.
What do London, New York, and Bermuda all have in common? If you ask Jamie Cuffe, the answer is that each is a major insurance hub.
Cuffe grew up across all three cities, as his father worked for Lloyd’s of London, the world’s oldest and most vaunted insurance market. He spent years in startups and has come full circle: Today, Cuffe is the CEO and cofounder of Pace, an agentic AI startup focused on insurance operations, especially around business process outsourcing (or BPOs).
“The Internet is really what gave rise to outsourcing,” said Cuffe. “In the 1990s, 2000s, for the first time, you could basically do this work wherever you were and send it back. Now we’re seeing the same thing, where all of this work that was being outsourced offshore can now be outsourced to AI.”
Pace—founded in 2024 by Cuffe—counts Prudential, The Mutual Group, and Newfront among its customers. The startup just raised $10 million in Series A funding from Sequoia Capital, Fortune has exclusively learned. In insurance, the BPO market is around $70 billion in annual spend, and if you include the broader financial services operations around the industry, that number ticks up to $400 billion, said Cuffe.
“That’s the part of the market that Pace really addresses,” said Bryan Schreier, the Sequoia partner leading the deal, who worked with Cuffe at his last startup, Cheer, which sold to Retool in 2020. “The thesis behind Pace is that the next wave of disruption on the operations side of insurance—this $100 billion market—is AI because it’s a perfect fit.”
Each in their way, both Schreier and Cuffe point out something I’ve thought about many times: That AI is an exceptional reader of massive quantities of material. It’s particularly suited to tasks that involve mountains of documents and technical verbiage. It’s why the “AI moment” hit the legal industry so hard, with the rise of mega-unicorns like Harvey and Legora. Cuffe argues this is why an “AI moment” is clearly coming for insurance.
“Legal took off first because copilots were useful, and there were a lot of people doing that work,” Cuffe told Fortune. “In insurance, the tasks are at much, much higher scale—hundreds of thousands or millions of submissions, tens of thousands of claims, for some of these insurers. They need to be able to process that… The agent moment is what’s unlocking the insurance industry for us.”
Joey Abrams curated the deals section of today’s newsletter.Subscribe here.
VENTURE CAPITAL
– RicursiveTechnologies, a Palo Alto, Calif.-based AI lab, raised $300 million in Series A funding. LightspeedVenturePartners led the round and was joined by FelicisVentures, SequoiaCapital, and others.
– Upwind, a San Francisco-based cloud security company, raised $250 million in Series B funding. BessemerVenturePartners led the round and was joined by SalesforceVentures, PictureCapital, and existing investors.
– Synthesia, a London, U.K.-based platform designed for generating videos with AI from text prompts, raised $200 million in Series E funding. GoogleVentures led the round and was joined by Evantic, Hedosophia, NVentures, Accel, KleinerPerkins, and others.
– Memcyco, a Tel Aviv, Israel-based digital risk protection platform, raised $37 million in Series A funding. NAventures, E. León Jimenes, and PagsGroup led the round and was joined by others.
– Visitt, a New York City-based AI-powered property operations platform, raised $22 million in Series B funding. SusquehannaGrowthEquity led the round and was joined by VertexVenturesIsrael, Anfield, and SaronaVentures.
– BarnwellBio, a New York City-based animal health and behavior intelligence company, raised $6 million in seed funding. Twelve Below led the round and was joined by MaxVentures, DormRoomFund, BanterCapital, and others.
– Midship, a San Francisco-based AI data automation platform, raised $4.2 million in seed funding. CostanoaVentures led the round and was joined by SeguinVentures and angel investors.
– ConsioAI, a Toronto, Canada-based provider of AI voice agents and phone services designed for e-commerce businesses, raised $3.3 million in funding. RTPGlobal led the round and was joined by SaaStrFund, MuVentures, and others.
– Lucend, a New York City-based AI platform designed for data center optimization, raised $3.3 million in seed funding. RemarkableVenturesClimate led the round and was joined by MitsubishiElectric’sInnovationFund, NewClimateVentures, Avesta, and Stepchange.
– Billdr, a Montreal, Canada-based AI-powered operating system for construction, raised $3.2 million in seed funding. WhiteStarCapital led the round and was joined by OneWayVentures, Desjardins Capital, asterX, and FormenteraCapital.
– Mantas, a Dubai, U.A.E.-based insurance and prevention platform designed for cloud outage risk, raised $1.8 million in pre-seed funding from NuwaCapital, SuhailVentures, PlusVC, and others.
PRIVATE EQUITY
– CVC agreed to acquire Marathon, a New York City-based credit manager, for up to $1.2 billion.
EXITS
– Leidos agreed to acquire ENTRUSTSolutionsGroup, a Lisle, Ill.-based utility engineering and consulting company, from Kohlberg, for approximately $2.4 billion.
– KPSCapitalPartners acquired Novacel, a Deville, France-based surface protection solutions company, from CompagnieChargeursInvest. Financial terms were not disclosed.
FUNDS + FUNDS OF FUNDS
– 2150, a London, U.K.-based venture capital firm, raised €210 million ($258 million) for its second fund focused on climate tech companies.
Jeppesen ForeFlight, based in Arapahoe County, laid off a large number of employees on Wednesday, raising concerns among some airline pilots who rely heavily on the company’s products, according to industry and employee reports.
The company has declined to provide the number of jobs being eliminated, and it hasn’t filed a Worker Adjustment and Retraining Notification Act, which is required when a company eliminates 50 or more jobs at a single work site.
Citing anonymous employee reports, one industry publication, AeroTime, estimated the cuts were around 30%, which would translate to more than 540 workers from an estimated headcount of more than 1,800 employees.
The company disputed those figures while declining to provide a precise number.
“Jeppesen ForeFlight made changes to streamline our operating model, which will support continued investment in product innovation and customer experience. While we are not sharing specific numbers, the current percentages being relayed through media are misleading and overstated,” the company said in a statement.
The company said it was supporting all affected employees with severance, benefits and resources through the transition and that “safe, reliability and our customer commitments remain unchanged and remain our top priority.”
JeppesenForeFlight is the leading provider of navigation and other software to the airline industry. Some pilots expressed concerns about the ongoing reliability and future quality of the company’s popular products, while others were taking a wait-and-see attitude, according to AeroTimes.
Last fall, the private equity firm Thoma Bravo paid $10.55 billion in cash for Boeing’s Digital Aviation Solutions, which included ForeFlight, Jeppesen, AerData and Oz Runways.
Thoma Bravo describes itself as one of the largest software-focused investors in the world, with over $181 billion in assets under management as of June 30.
The firm has generated strong returns for its investors, but is also known for aggressive cost-cutting and large and undisclosed layoffs. Among the euphemisms it has used in the past are “strategic organizational changes” and “staffing optimization effort.”
The company moved its headquarters from Salt Lake City to Denver in the 1940s. In the 1960s, it set up shop at 55 Inverness Drive East, where it has remained.
Jeppesen was such an important part of Colorado’s aviation history that Denver named the terminal of its airport after him and erected a statue in the terminal in tribute in 1995.
In 2000, Boeing acquired the company and expanded its offerings into flight planning, crew management, airline operations software and navigation data for commercial, business and military aviation.
ForeFlight was a separate company founded in 2007 in Houston and was behind a popular flight-planning and electronic flight bag application used by pilots. Boeing acquired the company in 2019.
As I was collecting Crystal Ball predictions for 2026 from readers, I found myself thinking a lot about the future of work.
In part, of course, that’s because you all were thinking about it—combing through email after email, I found waves of predictions about how AI will change our workplaces and our jobs. And I sensed two things: An undercurrent of anxiety, and a resounding sense that AI is our now and future coworker.
The anxiety may have been yours, readers, but it was perhaps mostly mine: I think it’s possible we’re moving towards a future where the most mundane tasks we humans have to do right now are taken over by agentic armies in a way that’s fundamentally good. Much as the Internet created new ways of working that have improved people’s lives, I’m hopeful that AI can too. But then, there’s part of me that says: No, we’re about to move into a world of relentless job contraction and depersonalized professional interactions, made more depressing by the fact they spring from craven laziness above all else.
All of this to say, I’m conflicted. And my ambivalence isn’t helped by the fact that Term Sheet readers—many of whom are investing in the technologies and startups that will shape tomorrow’s workplace—have divergent perspectives. Here’s a sampling of how readers are thinking about an issue that will only become more consequential going forward:
We will start hiring digital employees. We will start treating AI agents like junior staff with job titles, budgets, and spending limits. Once an agent can issue a refund or buy inventory, it stops being a tool and becomes a worker. —Cathy Gao, partner, Sapphire Ventures
You can now build digital autonomous workers that handle large portions of front-office work. We’re heading toward models and agents that can complete a full day’s worth of work with minimal or no human intervention, and we may already be there in some domains. —George Mathew, managing director, Insight Partners
In 2026, companies who rushed to make layoffs hoping AI would fill a significant gap will realize they need to re-hire to fill some of those roles. We saw this starting this year with companies like Klarna, re-hiring to fill customer service roles that chatbots failed at. Next year, we’ll see more of this. —Mahe Bayireddi, CEO and cofounder, Phenom
2025 made it clear that AI would shrink teams by carrying more of the workload. In 2026, the bigger shift will be who gets hired. Companies are increasingly pairing a small number of senior technical leaders with AI-fluent operators, often without traditional CS backgrounds. For VCs, this shift will redefine what a ‘strong early team’ looks like and how capital efficiency is priced. —Jiaona Zhang, CPO at Laurel
New grad hiring will continue to slow and niche talent, either for AI or specific backend infra, will be paid top dollar. As AI makes boilerplate programming table stakes, only great talent will be rewarded. Fewer people will want to major in Computer Science. —Deedy Das, partner, Menlo Ventures
The tensions around returning to the office in any form of mandated pattern are going to continue. While employers might argue it’s a hirer’s job market, if we have an exodus of talent it’s really hard to replace those skillsets. —Livia Bernardini, CEO, Future Platforms
The first real shockwave from AI won’t hit junior analysts; it’ll hit outsourcing. Anything that was being subcontracted to offshore hubs is up first, as AI takes over the repetitive, process-heavy work that used to justify those models. —Raj Bakhru, general manager and cofounder, Blueflame AI
Human judgment will stay at the heart of HR. While AI will streamline recruiting, compensation analysis, and enhance employee experience, humans will remain essential for interpreting nuance, intent and values. HR functions will evolve toward augmented intelligence. —Niki Armstrong, chief administrative and legal officer, Pure Storage
In 2026, agentic AI moves from copilots to autonomous operators. Agentic systems will handle entire workflows, turning automation into a competitive weapon. —Diane Yu, cofounder, Tidalwave
We will see companies and consumers ‘hire’ AI agents to act on their behalf. 2026 will be the year society adjusts to the new realities of AI agents and focuses on what guardrails we expect from the companies behind them. —Don Butler, managing director, Thomvest Ventures
The Term Sheet Podcast is back!… Our first episode of 2026 just dropped. My guest: Jenny Xiao, founder of Leonis Capital and former OpenAI researcher. She talks about why AI companies should be valued closer to (or even below) SaaS, the role academia plays in AI progress, the possibility of another “DeepSeek” moment, and more. Listen and watch here.
Joey Abrams curated the deals section of today’s newsletter.Subscribe here.
VENTURE CAPITAL
– Onebrief, a Honolulu, Hawaii-based operating system for the military, raised $200 million in Series D funding. BatteryVentures and Sapphire Ventures led the round and were joined by SalesforceVentures and others.
– JetZero, the Long Beach, Calif.-based designer of the world’s first all-wing airplane, raised $175 million in Series B funding. BCapital led the round and was joined by UnitedAirlinesVentures, Northrop Grumman, and others.
– Proxima, a New York City-based AI-powered drug discovery platform for proximity therapeutics, raised $80 million in seed funding. DCVC led the round and was joined by NVentures, Braidwell, Roivant, AIXVentures, and others.
– WasabiTechnologies, a Boston, Mass.-based cloud storage company, raised $70 million in funding. L2 Point Management led the round and was joined by PureStorage and existing investors.
– WitnessAI, a Mountain View, Calif.-based AI security platform, raised $58 million in funding. SoundVentures led the round and was joined by FinCapital, QualcommVentures, SamsungVentures, and ForgepointCapitalPartners.
– WithCoverage, a New York City-based AI-powered risk management platform designed to replace insurance brokers for businesses, raised $42 million in Series B funding. SequoiaCapital and KhoslaVentures led the round and were joined by 8VC and CrystalVenturePartners.
– Flip, a New York City-based developer of an AI program that automates customer service calls, raised $20 million in Series A funding. NextCoast Ventures and RidgeVentures led the round and were joined by DataPointCapital and others.
– Tive, a Boston, Mass.-based developer of supply chain and logistics visibility technology, raised $20 million in funding. LightsmithGroup led the round and was joined by SageviewCapital, WorldInnovationLab, AVP, and SupplyChainVentures.
– Klearly, an Amsterdam, The Netherlands-based payment acceptance platform for small and medium-sized businesses, raised €12 million ($14 million) in Series A funding. PayPalVentures led the round and was joined by ItalianFoundersFund and existing investors.
– RISALabs, a Palo Alto, Calif.-based developer of an AI operating system designed for oncology, raised $11.1 million in Series A funding. CencoraVentures and OptumVentures led the round and were joined by others.
– OurPetPolicy, a Boise, Idaho-based pet and emotional support animal platform for rental properties, raised $8 million in Series A funding. RETVentures led the round and was joined by StageDotO and CapitalEleven.
– GrowthPal, a New York City-based developer of an AI copilot designed for M&A, raised $2.6 million in funding. IdeaspringCapital led the round and was joined by angel investors.
PRIVATE EQUITY
– ArlingtonCapitalPartners acquired Pond & Company, an Atlanta, Ga.-based consulting firm for engineering, architecture, planning, and construction management. Financial terms were not disclosed.
– PlatinumEquity acquired a majority stake in NortonPackaging, a Hayward, Calif.-based plastic pails and packaging company. Financial terms were not disclosed.
– WindRose Health Investors acquired a majority stake in AvalonHealthcareSolutions, a Tampa, Fla.-based health diagnostics platform. Financial terms were not disclosed.
EXITS
– Aurex, backed by GodspeedCapital, acquired Alpha 2, a Chantilly, Va.-based provider of cryptographic engineering, cybersecurity, and engineering services. Financial terms were not disclosed.
– Investindustrial acquired Proveris, a Hudson, Mass.-based designer and manufacturer of spray and aerosol testing instrumentation, software and laboratory solutions for the pharmaceutical industry. Financial terms were not disclosed.
– MPearlRock acquired The Good Crisp Company, a Boulder, Colo.-based healthy snack company. Financial terms were not disclosed.
– O’Hara’s Son Roofing, a portfolio company of AngelesEquityPartners, acquired CPRankin, a Chalfont, Pa.-based roofing company. Financial terms were not disclosed.
– PrimeSourceBrands, backed by ClearlakeCapitalGroup, acquired AdvantageIndustries, a Deerfield Beach, Fla.-based gate hardware and pool safety solutions manufacturer. Financial terms were not disclosed.
– TruArcPartners acquired SchillGroundsManagement, a Westlake, Ohio-based commercial landscaping company, from ArgonneCapitalGroup. Financial terms were not disclosed.
– Turn/River Capital acquired StarLIMS, a Hollywood, Fla.-based informatics platform for laboratories, from FranciscoPartners. Financial terms were not disclosed.
– ValorExteriorPartners, a portfolio company of OsceolaCapital, acquired LandmarkExteriors, a Norwalk, Conn.-based roofing company. Financial terms were not disclosed.
PEOPLE
– BregalInvestments, a London, U.K.-based private equity firm, promoted JensBrenninkmeyer to CEO.
– GarnettStationPartners, a New York City-based private equity firm, promoted RafiHaramati to managing director, BradleyEzratty to principal, MaxHoberman to principal, and TeddySokoloff to vice president.
– M13, a Santa Monica, Calif.-based venture capital firm, promoted MorganBlumberg to partner.
– PeriscopeEquity, a Chicago, Ill.-based private equity firm, promoted LukeElder to principal and HarryWaddoups to vice president.
Private equity companies are cautiously deploying homegrown AI solutions as PE emerges as a major financing option for maturing companies looking for money beyond venture capital. The share of PE firms partnering with external AI providers dropped to 52% in 2025, down from 76% in 2024, according to a Dec. 8 Citizens survey. Citizens surveyed 153 leaders at PE firms with a fund size of less than $1.5 billion between Oct. 3 and Oct. […]
Italian company Bending Spoons flew largely under the radar — until last month. In a span of 48 hours, the company announced the acquisition of AOL and a massive $270 million raise, quadrupling its valuation to $11 billion, up from $2.55 billion set in early 2024.
Bending Spoons has grown rapidly by acquiring stagnating tech brands like Evernote, Meetup, and Vimeo, then turning them profitable through aggressive cost-cutting and price increases. While the company’s approach is similar to private equity, there is one key difference: Bending Spoons has no plans to sell these businesses.
Andrew Dumont,the founder and CEO of Curious, a firm that also acquires and revitalizes what he calls “venture zombies,” is convinced this “hold forever” strategy will become increasingly prominent in the coming years as AI-native startups make older VC-backed software businesses less relevant.
“Our belief is that the venture power law, in which 80% of companies ‘fail,’ produces many great businesses, even if they’re not unicorns,” Dumont told TechCrunch.
Dumont defines a “great business” as one that can be purchased at a low price and quickly revived to generate substantial cash flows. This “buy, fix, and hold” strategy is the playbook for a growing number of investors, from the 30-year-old Constellation Software, which pioneered the model, to newer players, including Bending Spoons, Tiny, SaaS.group, Arising Ventures, and Calm Capital, according to Dumont.
“Our whole model is to buy these companies, make them profitable, and use those earnings to grow the business,” Dumont said.
In 2023, Curious raised $16 million in dedicated capital for buying software companies that have stalled and can no longer secure follow-on investment.
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Since then, the firm has bought five businesses, including UserVoice, a 17-year-old startup that raised $9 million in VC funding from Betaworks and SV Angel.
“It’s a great business, but the cap table wasn’t aligned with keeping it. These funds get old, and these companies just sit there,” Dumont said. “We provide liquidity and also reset these companies for profitability.”
Although Dumont didn’t disclose how much he paid for UserVoice, he said that stagnant companies sell for a fraction of the valuation commanded by healthy SaaS startups, which typically sell for 4x annual revenue or more. Based on our conversation, we estimate that “venture zombies” sometimes sell for as low as 1x yearly revenue.
By implementing cost-cutting and price increases, Curious can push these businesses to achieve 20% to 30% profit margins almost immediately. “If you have a million-dollar business, you’re kicking off $300,000 in earnings,” he offered as an example.
They achieve the turnarounds because, unlike the stand-alone companies, they can centralize functions like sales, marketing, finance, and other admin roles, across all of their portfolio companies. “We’re not trying to sell the businesses we acquire and don’t need VC-scale exits, so we can balance growth and profitability more sustainably,” Dumont said.
When asked why VCs don’t urge their startups to be profitable like Curious does, Dumont responded by saying: “Investors don’t care about earnings; they only care about growth. Without it, there’s no VC-scale exit, so there’s no incentive to operate with that level of profitability.”
The cash generated from Curious’ companies is then used to buy other startups, Dumont said.
The firm plans to buy 50 to 75 startups like UserVoice over the next five years, and Dumont is certain he won’t have a shortage of targets to choose from. Curious is focused on acquiring startups that generate $1 million to $5 million in recurring revenue annually, a segment of the software market that, according to Dumont, private equity shops and secondary investors have historically ignored.
“We’ve been doing this for a little under two years now, and we’ve probably looked at at least 500 companies, and we bought five,” Dumont said.
While Bending Spoons’ big valuation hike may validate the “venture zombie” acquisition model, Dumont doesn’t expect a lot of new competition. Turning profits out of stagnation isn’t easy. “It’s a ton of work,” he said.
A look into private equity fundraising activities suggests strong Q1 launches of funds with renewable energy among their targets. Brookfield Asset Management Ltd, KKR & Co Inc, and Stonepeak Partners LP are all raising cash for $20 billion funds that include renewable energy investment. Brookfield’s chief financial officer, Hadley Peer Marshall, says a $7 trillion investment is needed to finance the rapid growth of artificial intelligence.
So far this year, clean energy investment has offered the potential for substantial returns. The Bloomberg Clean Energy Index has soared 31%, while the Bloomberg 500 Index rose 15% and the Bloomberg Magnificent Seven Index rose 20%.
While the growth in power demand from data centers ramps up, data center operators are decarbonizing. This is being driven by net-zero commitments and new regulations. With tech giants accounting for 43% of clean power purchase agreements signed in 2024, the data centers supplying the infrastructure for their AI projects are likely to continue moving toward green energy.
Selling to a private equity firm can be a life-defining opportunity for business owners, but only if you prepare strategically. Too often, companies rush into the process without optimizing their operations, financials, and growth story.
The result? They leave millions on the table.
Over my career advising mid-market firms through periods of transformation and ownership changes, I’ve seen what makes companies stand out to private equity buyers. If you’re considering a sale, here are five crucial steps to take, ideally starting 18 months before you enter negotiations.
1. Focus on EBITDA improvements early
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Private equity valuations hinge on a simple formula: EBITDA × multiple. EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortization, is a measure of a company’s profitability used to evaluate its operating performance. An EBITDA multiple is a valuation metric that compares a company’s total value to its earnings before interest, taxes, depreciation, and amortization.
That means you can improve your sale price two ways—by raising EBITDA or by convincing buyers to pay a higher multiple.
On the EBITDA side, start early. Implement operational improvements 12 to 18 months before you sell so that the gains are already visible in your profit and loss (P&L) statement when buyers conduct due diligence. Quick wins include reducing scrap and waste, improving efficiency, trimming material costs, or rightsizing headcount.
Avoid long-horizon investments, like new production lines or large-scale automation, that won’t show measurable returns before the sale. Buyers rarely give credit for future promises.
2. Build a playbook that unlocks growth
Multiples rise when buyers believe your company has a clear path to scale. The magic word here is “premium,” and buyers will pay it if you can demonstrate readiness for growth.
That means having a detailed playbook:
A clear capacity plan (e.g., where to add new assembly lines, how much space is available, and how long expansion would take).
A hiring roadmap (e.g., what happens if 10 new salespeople join tomorrow and revenue spikes 40%).
A realistic timeline for operational changes.
This should serve as a blueprint that lets the private equity firm know you are ready to scale the moment they invest.
3. Strengthen your operational infrastructure
Private equity firms want to see a company that is not only profitable but also professionalized. That means having:
A reliable Enterprise Resource Planning system to track financial and operational performance.
Clean, consistent financial reporting.
Cross-functional alignment between sales, operations, and finance.
If you can show investors a well-run, disciplined business, they’ll view you as lower risk and pay accordingly.
4. Assemble the right team to drive preparation
Creating a growth playbook and executing short-term EBITDA improvements isn’t a solo project. It requires collaboration across departments, but the effort should be driven by finance.
Your CFO (or equivalent) should lead the charge, ensuring every initiative ties back to the P&L. Operations and sales play critical roles, but finance must ensure you’re not spending money on projects that don’t help in the short term. Make sure the numbers already look good when buyers show up.
5. Choose the right time to sell
Perhaps the most overlooked factor in selling is timing, and it’s crucial not to sell too early. If you’re on a strong growth path and expect EBITDA to rise significantly next year, selling now means missing out on that value.
The ideal time to sell is when you’ve reached the limits of organic growth and need a partner to take the company further. It’s important to know that selling to private equity often doesn’t mean giving up everything. Many owners sell 60 to 70 percent of the business, retain 30 to 40 percent, and continue building under private equity ownership.
In fact, the second payout—when you sell your remaining stake three to five years later—can often exceed the first. That’s the power of partnering with the right investor to accelerate growth.
Final thoughts
Selling to private equity is not about window dressing; it’s about proving performance and potential. Focus on EBITDA improvements you can demonstrate, build a credible plan for growth, and time your exit wisely. This will allow you to maximize your first check and set yourself up for an even bigger one down the line.
Deciding whether to sell your business to an individual or a private equity firm can be a complex decision that comes down to two questions:
What do you want from the sale?
What does the buyer want?
Understanding the answers to these questions will help you evaluate which type of buyer aligns better with your priorities and can offer terms that meet your specific goals for the transaction.
When legacy matters: Individual buyer
Sellers who want to walk away from the business with a clean, simple deal should consider an individual buyer, especially if you want to preserve what you’ve built and keep your employees protected from layoffs or major shakeups. It’s also a solid choice if your company is a valued part of the local community.
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With an individual buyer you’re likely to get more money upfront, which doesn’t hurt. The buyer will be looking for a business to take over and grow, in a deal that’s as simple as possible.
However, one significant disadvantage to this kind of sale is that it’s often the first time most buyers have owned a business, so they tend to be cautious. They’re probably going to take more time to decide and will need more of your time and attention as they ease into ownership.
If you want to sell and walk away immediately, with no further involvement, an individual buyer might not be ideal. However, you can make the hand-holding less of a strain by defining the length of the transition period or assigning a member of your team to act as mentor to the incoming buyer.
Bridging the value gap: Private equity
If you want an infusion of cash to build your company so it fetches a big price at exit, private equity could be your solution. Perhaps demand is high for your product or services, but you lack the necessary resources to meet it, which is negatively impacting your valuation. A private equity buyer can close the gap and bring the company to the value you know it’s capable of. But remember, private equity firms have a fiduciary responsibility to maximize returns for their investors, which could affect the deal for years to come.
We’re currently working with a client who’s seeing hockey stick growth in their client base, adding hundreds of new customers every month, but the company is just treading water; it can’t fulfill all the orders. The owners could sell if financials supported a better valuation. Private equity can help grow the business, enabling owners to sell for more money three to seven years down the road.
Going for big rewards is a high-stakes gamble; you’ll need patience and a healthy supply of risk tolerance, understanding that an optimistic forecast may not pan out. Even more critical is the willingness to cede control of the company, even if you’re still involved in the business. A private equity buyer won’t just hand over the cash you need and wish you luck; they may give control to your management team, but they could also bring in their own management team. Either way, the owner is expected to step back and have a much smaller voice in the company’s direction once the private equity sale is final.
Making the decision
Money is the most common motivator when choosing between these options, but there are other complicating factors.
For instance, what’s more important—the valuation number on paper or the cash you’ll receive at closing? If the cash is more important, understand that you may get more money, but the valuation number may be lower, which affects the total price you receive.
Are you seeking a high valuation of the company you’ve built for an ego boost? Are you comfortable swinging for a home run that could pay off in huge profits later, or would you rather just knock out a nice, safe base hit now? Keep mind that what looks like a home run can quickly turn into a pop fly and you’re out of the game.
If you want guaranteed cash up front, you probably want to go with an individual buyer, but for a larger exit down the road, your best bet may be private equity. An individual buyer is not going to have the capacity to turn around and fast-track your growth in a short-term period and take you to the next level.
If legacy and employees matter most, I would opt for an individual buyer every time. They will want to keep the team; they love the business as it is and won’t want to make significant changes. Private equity may love your reputation and your team, but their prime motivator is money. If they have to cut staff or make other changes for the health of the financials, they’ll do it.
Both choices require talking to a value growth advisor or exit strategist, someone who’s done a lot of deals and understands your goals (like a third-base coach waving you home). Don’t just make assumptions based on what you’ve heard or read—not even in this article.
Final thoughts
Life after your business exit should also be part of your decision. If you want your next phase to be safe and secure and you want to feel like it’s all wrapped up and finished, selling to an individual buyer is probably your better path. You can’t do that with private equity because some of your money will be tied up for years after the sale.
Private equity is better if you’re chasing big growth and willing to take the risk that comes with it.
Whether you’re swinging for the fences with an equity deal or just want to round the bases with an individual buyer, choosing the right path means understanding what drives the buyer as much as knowing your own goals.
Attendees at this week’s Inc. 5000 conference in Phoenix got a first-hand look at some of the different paths that high-growth business leaders have followed to success during a panel on Thursday featuring creative growth capital strategies. On stage were three Inc. 5000 founders: Tony Lamb of the shaved ice truck business Kona Ice (No. 1935 in 2014), Vanessa Rissetto of the telehealth nutrition startup Culina Health (No. 564 this year) and Kim Vaccarella of the beach bag brand Bogg Bag (No. 434 in 2020).
All three founders achieved impressive scale with their startups, but financed them in very distinct ways. Vaccarella started Bogg Bag as a side hustle, using money from her kids’ college savings plan and husbands’ pension to kick things off before eventually inking a deal for a minority investment. Rissetto, meanwhile, built up Culina with referrals from doctor friends, then went down the venture capital path, closing a $7.9 million Series A late last year.And Lamb bootstrapped Kona Ice for a while before private equity eventually bought out his co-founder’s shares, leaving him with a 51 percent stake; following a second PE deal, he now owns around one-third of the company.
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People have very mixed feelings about PE funds, he told the Inc. 5000 audience, but “no one brings value like private equity brings value.”
Of course, not every financing opportunity bears fruit. Lamb said he fielded meetings with 15 different prospective investors before landing on the right one, while Rissetto turned down an early offer from a VC fund that said it would back Culina if it had $10 million EBITDA—to which Rissetto responded, “If I was $10 million EBITDA, I would not need you.”
Vaccarella also turned down a major deal with a public company because it would’ve given them full control over Bogg—something she was unwilling to sign over.
“I was not ready to give up my baby yet,” she says of the proposal, which would’ve been worth over $100 million had she taken it. She went into “a little bit of a depression” after rejecting the offer, she says, in part because she’d told her nieces and nephews that she would take them all to Disney when she thought the deal was going to happen.
But “better things come along,” she adds. Still, she encourages her fellow entrepreneurs to listen to their guts when it comes to working with the people on their cap table.
“They’re going to have a million ideas for you, because they’ve done it all a million times,” Vaccarella said. “The people that they were bringing in had so much more experience in bigger brands than Bogg Bag—but at the end of the day, what I do know is, I do know Bogg Bag. I know my customer. So I needed to forcefully, in the nicest way possible, come out and say, ‘No, this is the way I want to see it done. This is what we need to get back to.’”
She added: “Sometimes you lose yourself when you take on all those partners, and you’re intimidated by them. So finding that balance has been important for me.”
TANGLEY, England—Steve Schwarzman once said his business philosophy was to seek war. The Wall Street billionaire may have met his match in the chalk hills of southern England.
One morning in early September, refrigeration consultant Lawrence Leask woke before 3 a.m., got into his car in pajamas and slippers and waited. It wasn’t long before he spotted his quarry, a water tanker passing through this rural parish. Leask tailed it to the town of Andover to learn where it would eventually unload thousands of gallons of water.
Electronic Arts, maker of video games like “Madden NFL,” “Battlefield,” and “The Sims,” is being acquired for $52.5 billion in what could become the largest-ever buyout funded by private-equity firms.
The private equity firm Silver Lake Partners, Saudi Arabia’s sovereign wealth fund PIF, and Affinity Partners will pay EA’s stockholders $210 per share. The companies value the deal at about $55 billion, including debt. Affinity Partners is run by President Donald Trump’s son-in-law, Jared Kushner.
PIF, which was already the largest insider stakeholder in Electronic Arts, will be rolling over its existing 9.9 percent stake in the company.
The commitment to the massive deal is inline with recent activity by Saudi Arabia’s sovereign wealth fund, wrote Andrew Marok of Raymond James.
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“The Saudi PIF has been a very active player in the video gaming market since 2022, taking minority stakes in most scaled public video gaming publishers, and also outright purchases of companies like ESL, FACEIT, and Scopely,” he wrote. “The PIF has made its intentions to scale its gaming arm, Savvy Gaming Group, clear, and the EA deal would represent the biggest such move to date by some distance.”
PIF is also a minority investor in Nintendo.
Electronic Arts would be taken private and its headquarters will remain in Redwood City, California.
The total value of the deal eclipses the $32 billion price paid to take Texas utility TXU private in 2007.
If the transaction closes as anticipated, it will end EA’s 36-year history as a publicly traded company that began with its shares ending its first day of trading at a split-adjusted 52 cents.
The IPO came seven years after EA was founded by former Apple employee William “Trip” Hawkins, who began playing analog versions of baseball and football made by “Strat-O-Matic” as a teenager during the 1960s.
CEO Andrew Wilson has led the company since 2013 and he will remain in that role, the firms said Monday.
“Electronic Arts is an extraordinary company with a world-class management team and a bold vision for the future,” said Kushner, who serves as CEO of Affinity Partners. “I’ve admired their ability to create iconic, lasting experiences, and as someone who grew up playing their games – and now enjoys them with his kids – I couldn’t be more excited about what’s ahead.”
This marks the second high-profile deal involving Silver Lake and a technology company with a legion of loyal fans in recent weeks. Silver Lake is also part of a newly formed joint venture spearheaded by Oracle involved in a deal to take over the U.S. oversight of TikTok’s social video platform, although all the details of that complex transaction haven’t been divulged yet.
Silver Lake has also previously bought out two other well-known technology companies, the now-defunct video calling service Skype in a $1.9 billion deal completed in 2009, and a $24.9 billion buyout of personal computer maker Dell in 2013. After Dell restructured its operations as a private company, it returned to the stock market with publicly traded shares in 2018.
By going private, EA will be able to reprogram its operations without being subjected to the investment pressures and scrutiny that sometimes compel publicly held companies to make short-sighted decisions aimed at meeting quarterly financial targets. Although its video games still have a fervent following, EA’s annual revenues have been stagnant during the past three fiscal years, hovering from $7.4 billion to $7.6 billion.
Meanwhile, one of its biggest rivals Activision Blizzard was snapped up by technology powerhouse Microsoft for nearly $69 billion in 2023, while the competition from mobile video game makers such as Epic Games has intensified.
After being taken private, formerly public companies often undergo extensive cost-cutting that includes layoffs, although there has been no indication that will be the case with EA. After jettisoning about 5 percent of its workforce in 2024, EA ended March with 14,500 employees and then laid off several hundred people in May.
The deal is expected to close in the first quarter of 2027. It still needs approval from EA shareholders.
EA shares, which rose rose nearly 5 percent Monday, had jumped 15 percent Friday after rumors of a takeover began to circulate.
Copyright 2025. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
METHUEN — Across the Merrimack Valley, signs for three longtime health care institutions are coming down.
On Tuesday, mayors, state legislators, Lt. Gov. Kim Driscoll and other officials gathered outside Holy Family Hospital in Methuen to hear the new name for the medical facility and those for Holy Family Hospital in Haverhill and Lawrence General Hospital.
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AI is expected to touch all verticals within financial services, including private equity. There are emerging uses of AI in private equity, and like other industries, there is no playbook on how to deploy the technology, Christian Davis, associate partner at commercial data service provider JMAN Group, told Bank Automation News. “Some of those use […]
Opinions expressed by Entrepreneur contributors are their own.
Over the past few months, I’ve received a surprising number of emails and even phone calls from private equity firms asking if I’d consider selling my business.
“Gene,” they all say, “we’ve followed your growth in the technology space and believe we can help you unlock value while preserving your legacy and team. Would you be open to a 20-minute call to discuss mutual opportunities?”
It’s flattering, sure. And it makes sense. According to Harvard’s Corporate Governance site, private equity exits jumped from $754 billion in 2023 to $902 billion in 2024 — about a 20% increase. Other reports show deal value rising by 50% in the first half of 2024 alone, with strategic acquisitions leading the way.
Private equity is everywhere — scooping up contractors, manufacturers, distributors and yes, even tech companies like mine.
Why? Because many business owners are aging out. The average small business owner in the U.S. is over 55, according to the Small Business Administration — and that was back in 2020. So a wave of exits is underway, and investors are eager to buy businesses with strong financials, recurring revenue and growth potential.
But my business? I don’t think I’m sellable. Not because I wouldn’t entertain an offer — but because once a buyer looks under the hood, they’ll realize the uncomfortable truth: My company has no real value.
Let’s start with the basics. My business has no hard assets. No buildings, no equipment, no physical property. Just a bit of cash and accounts receivable.
Sure, we also have very few liabilities. In fact, most of our “payables” are actually prepaid client deposits — blocks of time that customers purchase in advance. It’s a great way to boost cash flow and reduce risk, but it creates a liability a buyer would need to honor. Not exactly attractive.
No contracts, no guarantees
We don’t lock clients into long-term contracts. We’ve never sold maintenance agreements or recurring support plans. Our clients use us when they need us — and leave when they don’t.
There’s no proprietary process or secret sauce. What we do isn’t complicated. In fact, anyone could learn it online. Our clients hire us not because we’re unique, but because they don’t have the bandwidth to do it themselves.
So if a private equity firm were to evaluate my company, they’d quickly realize there’s no predictable revenue stream to base a valuation on. No recurring income. No clear multiple to apply. We go project to project, client to client.
That might work for me. But it doesn’t work for them.
A team that disappears when I do
I do have employees. But most of the work is handled by independent contractors. That comes with its own risk — from worker classification issues to a lack of long-term commitment.
Our setup has always been virtual. We’ve been remote since 2005. No office. No shared culture. No in-person meetings. Everyone works independently, and I check in as needed. It works for us — but it doesn’t scream “scalable organization.”
The reality? This business doesn’t run without me. I do the selling. I do the marketing. I oversee projects, handle accounting, manage admin and lead the day-to-day. If I were hit by a bus tomorrow, this business would fold within 30 days — with contractors and staff likely splintering off to do their own thing.
No IP, no exclusivity, no moat
We implement CRM platforms. It’s a crowded, competitive space. The very vendors we represent are often our biggest competitors. There’s no barrier to entry. Competitors appear regularly — usually cheaper, often younger and sometimes better.
We don’t have any intellectual property, documented systems or defined processes. Every project is different, and it rarely makes sense to create templates or workflows that won’t apply next time.
So there’s nothing here to “buy.” No assets. No exclusivity. No edge.
So, what do I have?
I have a business that works for me.
For more than 25 years, it’s paid the bills, put my kids through college and built a retirement plan for my wife and me. It’s also supported dozens of employees and contractors along the way. That’s something I’m proud of.
My model has always been simple: do the work, bill for it, generate cash, save what you can. Rinse and repeat. And for me, it’s worked beautifully.
But let’s be honest: this model doesn’t build transferable value. There’s no goodwill. No buyer-ready systems. No brand equity. No enterprise value. Just a highly functional, one-person-driven operation that disappears without me.
You may be generating cash — and that’s great. You may be living well — even better. But unless you’ve intentionally built for scale, structure and succession, your business may not be worth much to anyone else.
And that’s okay — as long as that’s the plan.
For me, it is.
Over the past few months, I’ve received a surprising number of emails and even phone calls from private equity firms asking if I’d consider selling my business.
“Gene,” they all say, “we’ve followed your growth in the technology space and believe we can help you unlock value while preserving your legacy and team. Would you be open to a 20-minute call to discuss mutual opportunities?”
It’s flattering, sure. And it makes sense. According to Harvard’s Corporate Governance site, private equity exits jumped from $754 billion in 2023 to $902 billion in 2024 — about a 20% increase. Other reports show deal value rising by 50% in the first half of 2024 alone, with strategic acquisitions leading the way.
Opinions expressed by Entrepreneur contributors are their own.
The evolution of the private marketplace is one of the most significant developments to shape the capital markets in decades.
Just consider the statistics. In the late 1990s, there were more than 8,000 publicly listed companies in the United States. By 2008, there were fewer than 5,000. As of 2023, there were approximately 4,317.
Further, those companies that opt to go public are waiting longer to do so. According to a January 2025 analysis by Morningstar, the median age of companies debuting in the public markets increased from 6.9 years a decade ago to 10.7 years today.
Companies launch initial public offerings to access capital, boost visibility and provide liquidity for investors. Today, though, private equity firms, family offices and other strategic investors offer companies that same opportunity without the need to list.
Staying private means avoiding quarterly financial reporting requirements, which can become onerous and all-consuming. Operating privately allows owners and key stakeholders to retain more control and influence over the future of a company, prioritizing long-term goals over short-term shareholder and market demands and expectations. Private companies are not subject to the volatility and vacillation that come with being publicly traded, nor do they live by where the stock trades or quarterly results fall.
However, as the private marketplace becomes a more viable and commonplace option for an increasing number of companies, a significant issue has emerged: the need for greater transparency around and education about share ownership and share structure. Unlike public company stock valuations, which are readily available and accessible to all, there is less clarity around how private company shares are valued and how share classes are structured.
The importance of transparency and education
It is important for employees to learn how to build their wealth in a private company. Owning shares in a privately held business is a longer-term play, so understanding how they are valued and when they are distributed is critical to your personal financial plan.In turn, private companies have the responsibility to provide employees and investors with a clear and concise overview of how the equity is organized. Managed well, a private company stock program can be an incredibly effective recruiting and retention tool.
At Dynasty, for example, we launched an internal education program to ensure that our growing team of colleagues understands how we structure and issue our company shares. It is important to us that everyone feels comfortable asking questions and seeking advice about their holdings.
For business owners, managing your “cap table” or capitalization table — the document that outlines a company’s equity ownership structure, including all shareholders, their shareholdings, and percentage ownership — is also crucial, especially for startups and growing businesses. Giving out too many shares early on could hinder the future value of your business and its shares.
Growth is not vertical, so leaving some margin to weather the inevitable ups and downs is ideal. Issuing shares based on an employee’s time at the company and/or performance is also a sound strategy. With a myriad of details to consider, unique to your business, a cap table is a dynamic document that changes as a company grows and undergoes new funding rounds, employee stock option grants and other events.
For over 15 years, we have helped launch over 100 new businesses for our network of independent registered investment advisors (RIAs). As an entrepreneur, founder and chief executive officer of a privately held business myself, I understand the challenges inherent in the private market, and as a team, we have learned many lessons along the way, including for our own business.
We continue to pivot and innovate to meet the needs of our network and ourselves, which starts with stepping up to educate our own employees and clients on effectively navigating share ownership, structure and distribution for long-term success.
Private stock ownership should not and does not have to be an enigma. Your financial health depends on having the guidance of a financial advisor with both the experience and the specialized expertise to ensure that you understand your options as a private company employee.
The evolution of the private marketplace is one of the most significant developments to shape the capital markets in decades.
Just consider the statistics. In the late 1990s, there were more than 8,000 publicly listed companies in the United States. By 2008, there were fewer than 5,000. As of 2023, there were approximately 4,317.
Further, those companies that opt to go public are waiting longer to do so. According to a January 2025 analysis by Morningstar, the median age of companies debuting in the public markets increased from 6.9 years a decade ago to 10.7 years today.
For professional advisors like Baker Tilly Toronto, staying current in this business landscape is critical. And for insurance intermediaries, the key to thriving in this environment is to partner with experts like Baker Tilly Toronto that offer specialized expertise and strategic guidance.
Steven Frye, Baker Tilly Toronto
An ever-changing business landscape
“With the massive transfer of wealth currently going from one generation to the next, there’s a lot of consolidation going on,” explains Steven Frye, partner, audit, valuations and corporate finance at Baker Tilly Toronto, a leading independent audit, tax and advisory firm. “And private equity groups have driven the value of insurance brokerages up to a level that I didn’t even think was possible 20 years ago.”
While the rise of brokerage valuations is a good thing for owner-operated businesses, it also creates new complexities, such as increased competition, succession planning complications and the need for strategic planning to maximize value during transitions.
Technological advancements and the increasing use of artificial intelligence (AI) add further layers of market disruption. “AI is changing the way the insurance industry operates,” says Frye. “Twenty-five years ago, this was all just a concept.”
These disruptors threaten insurance providers’ stability and growth trajectory. Fortunately, Baker Tilly Toronto specializes in the insurance industry, providing personalized, specialty support through its team’s in-depth knowledge of financial, regulatory, compliance, technological, operational, benchmarking and bookkeeping issues related to the market.
“We stay current with what the issues are. A key to being a trusted advisor is to really understand where the client is at the moment.”
Steven Frye
Introducing Baker Tilly
Frye is a founding member of Baker Tilly Toronto, part of the Baker Tilly cooperative. He brings over 25 years of expertise in the valuation of insurance brokerages and consulting for companies in the financial services, manufacturing and technology-based industries. Frye’s experience in a broad range of specialty services (acquisitions and divestures, corporate finance, litigation support, regulatory matters and operations consulting) exemplifies Baker Tilly Toronto’s unique ability to address its clients’ needs successfully.
The firm’s well-trained teams work across a variety of disciplines to align their skills with client requirements, ensuring exceptional outcomes. In addition to providing assurance, valuation and corporate finance services to the insurance industry, Baker Tilly Toronto also helps clients with planning, operations and profitability.
“We stay current with what the issues are,” says Frye. “A key to being a trusted advisor is to really understand where the client is at the moment.” Baker Tilly Toronto offers strategic expertise to keep insurance providers competitive in the disrupted market. From succession planning to corporate finance, the firm works with insurance providers to ensure their businesses are well-positioned for the future.
WATERTOWN, Mass. — When most of the state’s powerful Democrats are decrying private equity investments in the health care system, U.S. Sen. Elizabeth Warren is making a pitch against investment firms wading into the care of animals as well.
Private equity has bought about 30% of all veterinary practices in the United States, Warren said during an appearance at the Heal Veterinary Clinic on Monday. These firms have also vertically integrated in the industry, many also buying up the labs where medical testing is done, and the insurance firms that pay for — and more and more frequently deny coverage for — a pet owner, the senator said.
“The consequence has been that the quality of care has gone down while prices have gone through the roof. We’ve seen about a 60% increase in prices overall,” Warren said.
Steward Health Care used private equity investments in its eight community hospitals in Massachusetts. Those hospitals were reportedly mismanaged before the company went bankrupt earlier this year, leaving two hospitals closed in its wake.
The senator from Cambridge met with owners of private practice vet offices, veterinary technicians working in the field, and one vet tech who said he left the industry in December after working under a corporate company because of the structural issues he saw.
They described vet offices bought out by these companies as dedicating less time to patients and focused on upselling pet owners to opt into more expensive care, and vets feeling overburdened and leaving the industry due to working longer hours while understaffed — what they described as profit-enlarging measures that aren’t reflected in their paychecks.
Focused on profit
“There’s these average cost-per-transaction expectations for doctors, and they’ll say they want to offer the ‘gold standard of medicine,’ which is full diagnostics, full blood work, panels done in hospital — which is more expensive than sent out — full X-rays, sometimes urinalysis as well, when it’s not necessary for what they’re there for,” said Isabel Urban, a veterinary technician. “It’s pushing clients to do more than they really need to do.”
Urban works at a corporate-owned veterinary office, but asked that her employer not be named.
Karen Holmes, owner of Holmes Family Veterinary Clinic in Walpole, said one of her patients had to go to a private equity-owned urgent care for emergency care recently when her dog was throwing up, where she paid $1,700 for a full examination when they “proposed a laundry list of possibilities” but but ultimately just sent them home with stool softener.
Holmes said she does not blame the vets for being thorough, but that she could have given more focused medical attention that would not have racked up the same cost — and that as a private practice owner she sometimes absorbs the price of certain things for her patients.
“She’s an older woman. I don’t know what her income is, but it’s not a lot, and she loves her dog,” Holmes said. “I see my clients struggling and suffering, and I’m loath to send them to places where I know the same blood work that I run, that I send to the same labs, is going to be two or three times what I charge them.”
Vets’ high suicide rate
Urban said that patients have accused her of killing their pets when she presents them with the high cost of their care.
Zack Beckwith formerly worked at a private equity-financed vet hospital, but said he had to quit in December because his mental health was suffering due to the job. He said he was working in unsafe conditions with the animals, he was often putting in extra hours of unpaid labor outside of his shift to help when they were understaffed, and that employees were chided for taking time off for family emergencies.
“They’re continuously looking for more profit, more hospitals,” Urban said. “They want to open 60 hospitals in a year, and they don’t care that these corporations can’t staff these hospitals. They’re like, well, it’s OK, if one person works overnight and they’re drowning, as long as they continue to do that and they can continue to be paid the minimum amount, it’s OK.”
Beckerwith said the suicide rate for veterinary technicians is five times higher than the general population. When Warren asked what they could do to get him to rejoin the understaffed industry, he said he didn’t think he would ever go back.
“Right now it seems so hard to get out of the hole that’s been dug in this field,” he said. “I just wish humanity would come back to the field. My management, over time, just got less and less human and cared less and less about our people.”
‘Only value in the mix’
Warren asked the veterinarians what they thought of the argument that private equity comes into businesses that are not running as profitably as they could be, and disciplines them to become more profitable.
Amanda Leef, co-owner of Heal Veterinary Clinic in Watertown, and Holmes said they get approached multiple times a week by firms interested in buying their companies.
“Every business should be profitable, and sure, it allows us to buy a new X-ray machine, because we have capital to invest. But what’s really different is having profit be the only value in the decision mix,” said Jamie Leef, co-owner and general manager of Heal.
He continued, “We have other values. They are about community. They’re about taking care of clients. Once you bring those things into the mix, the profit starts to subside a little bit as being the driver of decisions.”
Consolidation of care
Warren sent a letter last month with Sen. Richard Blumenthal of Connecticut to private equity firm JAB Holding Company with their concerns about their spending “billions on buying up veterinary practices” and “the rapid consolidation of veterinary care.”
Private equity isn’t exclusively seeping into health care industries. It is infiltrating other markets, managing roughly 20% of all business in the U.S. as of 2021, according to Forbes.
“For more than a decade, private markets have enjoyed a remarkable period of sustained growth, more than doubling from US$9.7 trillion in assets under management (AUM) in 2012, and are estimated to have reached $24.4 trillion AUM by the end of 2023,” says a report from EY.
Private equity companies benefit from tax advantages carved out by Congress.
“Your tax dollars are helping private equity come chew up the veterinary industry, and this is something we have got to make changes in this area, but particularly when health is involved,” Warren said Monday.
Warren’s visit was aimed at garnering support for a bill she filed with Sen. Ed Markey, in light of the Steward Health Care hospital crisis, to better regulate private equity in health care.
“It would take away the tax advantages that they have. It would force them to be more transparent. So if your veterinary practice gets bought out by private equity, you will know that, so that our regulators will know to take a closer look at what goes on, and then special provisions in the health care field when life and death is on the line. We need to have more oversight when private equity moves in, and we need more responsibility when these private equity executives alter the delivery of health care so that lives are put at risk, then they need to be held personally responsible for that,” Warren told reporters.
The bill hasn’t had much traction with her colleagues — as her previous attempts to take on private equity in health care have also been met with resistance in Congress.
“I have not enough to get it across the finish line, I’ve got a lot of people who are learning about private equity, but it won’t surprise you to learn private equity hires lobbyists and family veterinary practices don’t, so it’s not a level playing field in trying to get the message across,” she said.
“Private investments” is a catch-all term referring to financial assets that do not trade on public stock, bond or derivatives markets. They include private equity, private debt, private real estate pools, venture capital, infrastructure and alternative strategies (a.k.a. hedge funds). Until recently, you had to be an accredited investor, with a certain net worth and income level, for an asset manager or third-party advisor to sell you private investments. For their part, private asset managers typically demanded minimum investments and lock-in periods that deterred all but the rich. But a 2019 rule change that permitted “liquid alternative” mutual funds and other innovations in Canada made private investments accessible to a wider spectrum of investors.
Why are people talking about private assets?
The number of investors and the money they have to invest has increased over the years, but the size of the public markets has not kept pace. The number of operating companies (not including exchange-traded funds, or ETFs) trading on the Toronto Stock Exchange actually declined to 712 at the end of 2023 from around 1,200 at the turn of the millennium. The same phenomenon has been noted in most developed markets. U.S. listings have fallen from 8,000 in the late 1990s to approximately 4,300 today. Logically that would make the price of public securities go up, which may have happened. But something else did, too.
Beginning 30 years ago, big institutional investors such as pension funds, sovereign wealth funds and university endowments started allocating money to private investments instead. On the other side of the table, all manner of investment companies sprang up to package and sell private investments—for example, private equity firms that specialize in buying companies from their founders or on the public markets, making them more profitable, then selling them seven or 10 years later for double or triple the price. The flow of money into private equity has grown 10 times over since the global financial crisis of 2008.
In the past, companies that needed more capital to grow often had to go public; now, they have the option of staying private, backed by private investors. Many prefer to do so, to avoid the cumbersome and expensive reporting requirements of public companies and the pressure to please shareholders quarter after quarter. So, public companies represent a smaller share of the economy than in the past.
Raising the urgency, stocks and bonds have become more positively correlated in recent years; in an almost unprecedented event, both asset classes fell in tandem in 2022. Not just pension funds but small investors, too, now worry that they must get exposure to private markets or be left behind.
What can private investments add to my portfolio?
There are two main reasons why investors might want private investments in their portfolio:
Diversification benefits: Private investments are considered a different asset class than publicly traded securities. Private investments’ returns are not strongly correlated to either the stock or bond market. As such, they help diversify a portfolio and smooth out its ups and downs.
Superior returns: According to Bain & Company, private equity has outperformed public equity over each of the past three decades. But findings like this are debatable, not just because Bain itself is a private equity firm but because there are no broad indices measuring the performance of private assets—the evidence is little more than anecdotal—and their track record is short. Some academic studies have concluded that part or all of private investments’ perceived superior performance can be attributed to long holding periods, which is a proven strategy in almost any asset class. Because of their illiquidity, investors must hold them for seven years or more (depending on the investment type).
What are the drawbacks of private investments?
Though the barriers to private asset investing have come down somewhat, investors still have to contend with:
lliquidity: Traditional private investment funds require a minimum investment period, typically seven to 12 years. Even “evergreen” funds that keep reinvesting (rather than winding down after 10 to 15 years) have restrictions around redemptions, such as how often you can redeem and how much notice you must give.
Less regulatory oversight: Private funds are exempt from many of the disclosure requirements of public securities. Having name-brand asset managers can provide some reassurance, but they often charge the highest fees.
Short track records: Relatively new asset types—such as private mortgages and private corporate loans—have a limited history and small sample sizes, making due diligence harder compared to researching the stock and bond markets.
May not qualify for registered accounts: You can’t hold some kinds of private company shares or general partnership units in a registered retirement savings plan (RRSP), for example.
High management fees: Another reason why private investments are proliferating: as discount brokerages, indexing and ETFs drive down costs in traditional asset classes, private investments represent a market where the investment industry can still make fat fees. The hedge fund standard is “two and 20”—a management fee of 2% of assets per year plus 20% of gains over a certain threshold. Even their “liquid alt” cousins in Canada charge 1.25% for management and a 15.7% performance fee on average. Asset managers thus have an interest in packaging and promoting more private asset offerings.
How can retail investors buy private investments?
To invest in private investment funds the conventional way, you still have to be an accredited investor—which in Canada means having $1 million in financial assets (minus liabilities), $5 million in total net worth or $200,000 in pre-tax income in each of the past two years ($300,000 for a couple). But for investors of lesser means, there is a growing array of workarounds:
