Insights

2022-2023

With the U.S. economy on track for a “soft landing” after extreme periods of low rates and high rates, there are still plenty of risks posed by politics and global conflicts, Lateral’s thematic focus areas(*) have consistently powered through the gyrations of rates and the economic cycle. Lateral remains focused on lower middle market US technology and services companies and the PANTHER archetype(**) to partner with great founders and businesses that can become market leaders in their respective categories.

(*) Technology-enabled Services, Cloud Solutions, B2B Software and Industrial Technology
(**) Proven unit economics, Annual recurring revenue, Non-sponsored ownership, Transformational growth, Hurdles we can help with, Extraordinary advantages, Reach to effect change

2021- 2022

The Fed’s Quantitative Tightening (QT) is singularly focused on defeating the inflation monster, puncturing one economic bubble after another and returning the economy back to a New Normal. The reversal of the Fed’s unprecedented pandemic-era measures has crushed the bond market and is likely to drag the stock market down further and reveal Unicorns as less mythical and more ordinary. The Panthers meanwhile have potential to thrive with improved labor conditions, and more rational competitive dynamics which favor organic growth and near-term profitability.

2020 – 2021

Lateral’s “Panther” portfolio companies weathered the stormy seas of 2020-2021 and managed to catch some extraordinary waves into a promising future. The unprecedented government intervention prevented a financial crisis but created a host of long-term issues such as market bubbles, an uneven surge of inflation and negative credit yields.

2019 – 2020

While the path wasn’t easy before COVID-19, Panther businesses will continue to be nimble and opportunistic over the next 12-24 months in navigating a gauntlet of macro and micro issues ahead, on a treacherous and uncertain path. The business outlook probably won’t clear up until the 2nd half of 2021, when a vaccine is likely to be available and manufactured at scale in the United States.

2018- 2019

Different obstacles on the climb to the top: VC, Buyout and Lateral. Business owners have funding choices across different stages of their life cycle in choosing among Venture Capital, Private Equity and Lateral. How an owner-operator climbs the mountain of obstacles to achieve sustainable profitability–and their choice of financial partner–significantly affects the probability of success and the risk/reward in ultimately getting to the top.

2017- 2018

The seats around the table for middle market funding are exclusively for Unicorns and Sponsor-backed companies. Even the highest potential, owner-operated businesses are left out. Most non-sponsored and owner-operated U.S. companies aren’t invited to the table for middle market financing which is dominated by startups and private equity sponsor-owned firms.