On Tuesday, September 23rd, the Financial Management Association of New Hampshire (”FMA of NH”) hosted its first event entitled “Preparing for a Successful Liquidity Event in Today’s Volatile Markets“.  I am fortunate to be among the founders of FMA of NH and to have had the opportunity to participate in the panel discussion on this very timely topic.  Peter Alternative and Bas van der Brugge of Mirus Capital started the evening’s discussion with a recap of the current market environment for merger and IPO activity, and touched on the availability of funds from the venture and investment community.  Steven Bell, Senior Director of Finance at venture-backed Vertica Systems, Inc., also particpated on the panel and gave his corporate perspective of deal activity and funding availability [in the way of full disclosure, Vertica is also an MFA client].

The evening’s discussion has me thinking more and more about this topic.  Let’s make no bones about it - the IPO market quite clearly is closed for the time being and we don’t expect to see any liquidity from that market in the near term.  Similarly, our guests from Mirus painted a pretty bleak picture on the M&A front.  However, there was a contrast worthy of note, and I continue to see anecdotal evidence in the market that suggests that all is not lost.  For example, one might think that this is not the time to be raising new money from venture or angel investors.  But as Steve fairly pointed out, companies like Vertica that have a solid business strategy, sound leadership team, and a market solution that customers are clamoring for, can still raise equity with relative ease.

I have been taking note these past few weeks of a number of examples whereby emerging technology companies have closed on new rounds with new investors, not just inside rounds.  Cash-rich investors, not just VCs, are still on the hunt for new deals and are approving and funding new deals.  Private equity investors are closing on new funds and are adjusting their models to rely less on the debt markets to get deals done.  We also have clients receiving LOI’s as early as this week from strategic buyers at healthy multiples.  An LOI doesn’t mean a deal will close, per se, but I find it to be an amazing sign of optimism in a market such as this.

I won’t deny that these are extremely difficult times for anyone looking to raise capital or execute on an exit strategy - they are.  The options have been severly limited by market forces.  But opportunities abound  in both day to day operations (as noted in Carl Famiglietti’s recent post) and capital strategy if you’re ready for the challenge of finding the right investment partner.  I encourage every entreprenuer reading this blog entry to stay true to his or her vision, focus on execution and market penetration, and continue to forge the necessary relationships to ensure success.

UPDATE:  I found this great blog post, even among others like Ron Conway’s recent email, that puts forth some great thoughts on this subject:  During Tough Times, The Echo Chamber Can Be Your Best Friend. 

This entry was posted on Monday, October 6th, 2008 at 11:00 am and is filed under General Business, M&A. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.