EisnerAmper Podcast Private Equity Investing in Cloud Computing and Managed IT Services
Apr 12, 2023
Sean Frank, CIO and Founder of Cloud Equity Group, dives into the nuances of private equity in cloud computing and managed IT services. He discusses how rising interest rates and a strong dollar impact financing decisions. Sean emphasizes the need for enhanced due diligence amid economic challenges and shares insights on strategic exit planning for businesses. He also reveals how current economic conditions create unique investment opportunities, highlighting resilience in tech-enabled services during inflation.
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Investment Strategy in Uncertain Times
- Cloud Equity Group, amidst economic uncertainty, focuses on undervalued companies.
- They capitalize on decreased competition due to banks reducing lending.
Financing Strategy
- Cloud Equity Group utilizes committed acquisition facilities, mitigating the need for deal-specific debt raising.
- This approach enables continued capital deployment despite market fluctuations.
Portfolio Performance in Inflationary Environment
- Cloud Equity Group's portfolio companies, being B2B service providers with contracts tied to CPI, benefit from inflation.
- This results in increased revenue and improved margins, as only a portion of their costs are inflation-sensitive.