Capital Cycle Theory

Happy Wednesday folks!

Thanks for joining us for another edition of Atlasview Insights. We use this newsletter to share our strategies, philosophies, experiences, and lessons we’ve learned along the way. Small bite-sized insights for business owners, dealmakers, and investors.

In this newsletter, we cover: 

• Interested in Leading a PE-Backed Company?

• Have An Opportunity For Us?

• Capital Cycle Theory

• ICYMI - Popular Previous Issues

• Our Deal Process

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Before we jump into this issue, a quick reminder, Atlasview Equity Partners is a private equity firm that acquires and builds capex-light B2B businesses. For platform investments, we look for:

• Business Model: vertical software, business services, specialty distributors

• Business Size: minimum $1m EBITDA or $10m revenue

• Business Profile: sticky B2B customer base

• Business HQ: US & Canada

For add-on acquisitions for our portfolio companies, we have no size/geography criteria. We’re actively seeking add-ons in the library, archive, legal, and government niches.

Whether you’re a business owner interested in working with us, or an intermediary with a deal to share, always feel free to contact us!

Popularized by Marathon Asset Management via the book Capital Returns, Capital Cycle Theory dictates that investor returns are largely impacted by the capital flowing in or out of industries. Being on the right side of capital flows can generate sizeable returns. And being on the wrong side of capital flows can absolutely destroy your returns.

When an industry experiences growth, it will attract excess capital from investors (mostly due to investors over-extrapolating growth). Two main things happen when too much capital flows into an industry:

• Supply increases: the excess capital attracts new competitors to launch

• Capex overspend: businesses spend too much on assets (or even worse, opex)

The combination leads to businesses generating lower ROIC (profitability compresses while capital base increases). The result is that investor returns worsen subsequent to excess capital flows. Conversely, when capital is sucked out of an industry – investor returns will, generally, subsequently improve.

There is no such thing as a “secular growth” industry. Every industry is cyclical from a capital standpoint and some cycles are longer than others. Before investing in a business, we always get an understanding of where the industry stands in the capital cycle. We want to avoid industries that are too saturated in capital or has recently seen a large amount of institutional capital in flow.

Here are some of our previous popular issues:

The Lindy Effect

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January 4, 2024

At Atlasview, we are big believers in The Lindy Effect. Popularized by author, Nassim Taleb, it states that the longer something has been around, the longer it will likely continue to be around. Businesses with longevity often come with a high degree of resilience

Atlasview Completes Sale of Viostream to Banyan Software

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August 8, 2024

Toronto, ON - Atlasview Equity Partners (“Atlasview”) has successfully realized its investment in Viostream through a sale to Banyan Software. Banyan is a leading acquirer of great enterprise software businesses globally.

5 Value Creation Levers To Increase Revenue

June 5, 2024

As the saying goes, revenue cures all ails. The first value-creation opportunity Atlasview looks for in a business is organic revenue growth. There are often low-hanging fruits to increase the top line without the need to invest additional capital.

We pride ourselves on having a simple and transparent process. Our streamlined process enables us to move quickly to get you answers fast.

• Step 1: Contact Us

• Step 2: Execute NDA & Schedule Call

• Step 3: Receive Offer & High-Level Terms​

• Step 4: Execute LOI & Complete DD

• Step 5: Close Deal & Receive The Cash

• Step 6: The Fun Part Begins!

Whether you’re a business owner interested in working with us, or an intermediary with a deal to share, always feel free to contact us!

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Atlasview Equity Partners is a private equity firm that acquires and builds capex-light B2B businesses. We combine patient capital with proven strategies to deliver predictable results for our stakeholders.