Source Talks is a series where we discuss deal origination with PE and M&A pros, in collaboration with David M. Toll. 

In this episode David speaks with Matt Moore, Partner at Alpine Investors, about their investment focus and emerging trends in the M&A Market.

Machine generated transcript below:

Matt, tell me a little bit about Alpine Investors and the kind of investing that you do there.

Yeah, so Alpine Investors is a middle market PE firm. We’ve been around since two thousand one. We just closed our seventh fund last late last year, which is a billion dollar fund. We invest in software and services companies up to four hundred, four hundred fifty million of enterprise value, and it’s primarily focused on businesses in transition. So overall, year to date, our capital deployed is down year over year. But what’s really interesting is our piece of deals is actually higher. So we’ve closed twenty five deals since mid-March and year to date, 2020. We’ve actually closed more deals than we have in 2019.

Tell me about some of the the big trends in software and services that are creating these new opportunities for you.

So on the services side, I think we’re seeing a ton of really interesting acquisition opportunities in essential services, businesses that did not get shut down by the pandemic. For us, that means plumbing. In fact, we have both a commercial platform as well as a residential platform. We’ve done 15 deals just in HPC over the last year and a half. And so we’ve seen a ton of deal activity there. And it’s because I think you’re starting to see these companies be really highly valued, not just in residential and commercial HPC, but all essential services be pest control or any any number of them on the software side.

One one other accelerant is just more broadly speaking, the proliferation of cloud based infrastructure, technology, your US, your resume or your Google cloud that is really lowering the cost for net new companies to start. And frankly, that lowering of the cost means that they’re more likely to be bootstrap than raising large amounts of venture capital money. So what we’re seeing is a lot of companies that are starting to come of age, you know, 10, 20, 30, 50 million of recurring software revenue. And they’re primarily bootstrapped as opposed to taking large amounts of venture funding.

Matt, tell us about the role that technology plays in your origination efforts.

If you look just a few years back, I mean, we have five or 10 different software tools that we use now, including tying in both our origination efforts to the back end fund accounting to make sure that we have all of our data as a firm and an institution in one spot on the dual origination side, specifically the Sutton Place weekly deal list that comes out, which we tie into that CRM so we can see what deals happen in the past seven days, what what ones we saw, what ones we didn’t see, so that we can revise and be nimble and actionable and agile. And how we cover the market is really important because if we don’t know what the universe is out there, it’s very hard for us to react to that.

But what do you pay someone who runs a fool’s errand? Fool’s gold. Oh, my God, you got it. Good job. Thank you.

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