Distressed Tech PE
Are there any firms out there that focus on distressed investments specifically in the tech space? Seems like it would be a super promising area especially right now.
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Vector Capital is the only one I can think of off the top of my head.
Do they do specifically distressed work? I know they’ve done some distressed credit investments but I didn’t know their PE team does that too
Interested in learning more about Vector if anyone has insights
Some of the big PE tech guys will do light turnarounds. The problem in tech is that a lot of distressed situations are the result of pretty critical product issues/getting leapfrogged by a competitor. So it's not a gradual/small decline, but a huge "fuck me" type of situation.
I do know a smaller firm that does them. Garbage site but he's done some real deals: https://tech-rx.com/
I would look @ who has worked with these guys btw, they are very well known: https://techcrunch.com/2020/04/13/silicon-valley-restructuring-veteran-…
BTW, "fuck me" sits can be fixed, but it's really hard in tech because a big part of successful tech companies is amazing culture + smart people and those smart people attracting more smart people.
Marlin Equity is also known for doing some tech deals with a bit of hair on them
Know anything else about them? Reputation/performance/culture/recruitment?
Second this - interested in hearing a little more about Marlin.
True, but they're pretty industry-agnostic right? They've definitely done a fair number of turnarounds but I think Vector is much more tech-focused
One guy at FP likes some hair tech deals, bought something for CHEAP I heard... like unheard of cheap
I mean they have a dedicated tech coverage team same as many other funds. If you only want firms that are 100% tech at a fund level, your pool is going to narrow considerably
Axial Markets
Clearlake
Marlin, Platinum, Ares, Gores, Francisco Partners
Not specifically distressed/workout, but Siris Capital is a TMT buyout fund focused on markets with secular headwinds. Pretty sure they do mostly value-oriented/hairy deals. Don't know them super well but could be worth a look.
It's funny because I would never have thought of "distressed tech" as an actual thing folks could focus on...but now the question has been asked, I'm sure there are versions of it out there.
I agree with the above on Clearlake - they are animals. I'd argue some "tech with hair" is very different than actual "distressed tech" - I haven't seen too many Saas companies go through BK. But hey, you never know - especially with how highly levered some of these deals are and this current market.
"Distressed" may not be a great word for it, but the top "tech-focused" value-oriented shops out there are Vector, Siris, STG, and arguably Marlin and Clearlake. Vector, Siris and STG are explicitly tech-only strategies, while the others tend to invest across lots of industries (though Marlin seems to be doing a stupid amount of enterprise software these days).
Like the comments above have mentioned, distressed tech is pretty challenging for a number of reasons, but I think we'll start seeing more of through buyouts of legacy tech companies that just aren't keeping up. Vector's been doing a lot of that recently, which makes sense given they also have a credit strategy and the CEOs of these companies desperately need loans before they realize what they actually need is a fat paycheck from a buyout firm.
Haha, wouldn't put Clearlake and value in the same sentence. Understand this is tech and high multiples are the name of the game but... know that Clearlake has paid >20x multiple times. But whatever they do, they have 2 billionaires in a ~15 person shop...
Will probably catch some MS for this as it is incredibly competitive in terms of recruiting, but anything Apollo will have a turnaround aspect to it. Have seen details on a few of their tech deals, and trust me, they are shockingly low valuation multiples with really bespoke turnaround plans. Feel free to shoot me a PM if you would like more details.
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