Regardless of the effects of inflation, interest rate hikes, and the volatility in public markets, the market for private companies is still strong – for the moment.

State of U.S. Federal Finances

For the first time in history, the national debt exceeds the gross domestic product (“GDP”). This didn’t even occur in 2008 to 2009 during the “Second Great Depression”. National debt is $36 trillion while Gross Domestic Product is $25 trillion – national debt is 136% of GDP. Furthermore, US Treasury Revenue is about $4.9 trillion AND we’re spending just about $7 trillion with an increasing deficit. US Federal Revenue is only 14% of our national debt. National debt will never get reduced, much less paid back at this rate. Debt service alone on the $36 trillion would also seem to indicate that we will never have a balanced US Federal Budget again – ever. We are simply spending ourselves into a market correction.  These numbers are alarming and owners are strongly advised to get ahead of any pending market correction.

Public Market Volatility and Geopolitical Concerns

Right now, we’re experiencing tremendous volatility in public markets. While earnings per share have been at record highs for some time, the market seems content with that level of performance. This volatility is caused more by geopolitical issues relating to tariff’s rather than some underlying financial metrics. Many owners of private companies are nervously watching public market volatility as it pertains to the value and market for their private companies.

 Historically, investment in private companies outperforms that of public markets. Buyers and investors want to be in the private market- it’s less volatile and has greater returns than the public market. Even with the volatility of the last month, we have seen no slowdown in the appetite to acquire and invest in private companies. We’re seeing record high values being paid for private companies. In fact, public market volatility looks like it may help the private market.