Cheaper credit still needs a cash cushion
August borrowing costs improved, but weaker sales make the autumn cash requirement a separate decision from the price of debt.
Dated notes from the Praxus Capital desk on private markets, technology deal-making, and market structure.
August borrowing costs improved, but weaker sales make the autumn cash requirement a separate decision from the price of debt.
September construction releases show rising input costs and nonresidential spending growth concentrated in data centers. Acquisition terms should follow the unfinished jobs, not the sector headline.
Acquirers have stopped paying for the word and started testing the substance. In technology processes, AI claims are now diligenced like revenue quality. Sellers should prepare for that scrutiny before launch, not during it.
Corporate acquirers are the largest buyers in the market and the most selective. In 2025 they drove software M&A and paid the widest premium in a decade. By mid-2026 they had pulled back from sponsor-owned assets. A credible strategic bid changes the design of a process, and the process has to be designed for it.
Timing a raise or a sale to the rate cycle is a trade most private companies lose. The window that matters is company-specific, set by momentum, runway, and buyer attention. It rarely lines up with the macro one.
What began as a release valve for institutional portfolios has become ordinary market plumbing. Sponsors, LPs, and founders alike now treat the secondary market as a first-class source of liquidity, and structure for it from the start.
In software processes this year, buyers are paying for retention, pricing power, and mission-critical workflows over raw growth rates. The diligence bar moved; positioning has to move with it.
In a market where buyers hold the clock, outcomes are decided before launch, in the data room, the model, and the narrative. Preparation is not a formality. It is the spread between a fair price and a full one.
Non-bank lenders now set the terms of leverage in the lower middle market. Speed and flexibility come with covenants and cost. Founders should understand both sides of that trade before the term sheet arrives.
The straight line from build to IPO or outright sale has bent into a set of paths. Continuation vehicles, minority recaps, and structured partials are all normal outcomes now. Choosing among them early is part of building the company itself.
The public first-quarter deal data pointed to better financing for some platforms. Owners still needed borrower-specific terms before increasing an acquisition budget.
April releases made the timing of supplier costs and customer repricing a useful starting point for industrial earnings diligence.
HSR thresholds rose while the filing form was under challenge. Owners needed separate answers on reportability, filing readiness and permission to close.
November's evidence separated borrowing cost from a bank's willingness to lend. Owners needed to test usable cash, not just quote rates.
Whether the transaction is now or three years out, it is the same firm, the same analysis and the same partners.
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