RC

.@carrynointerest explains the looming crisis for software private equity: “It all comes down to the fact that they were borrowing against ARR and not EBITDA. There’s very little profit to borrow against with a high-growth enterprise software company. And so what do you do? You need to juice your IRR somehow, so you need to borrow." "So you’ll go to a bunch of private credit funds and say, ‘Look, I’ve never lost money on a deal. You can’t lose with me. Just let me borrow against the ARR, and before it comes due, you know me, I’m going to sell it, and we’re all going to buy another Gulfstream, and we’re going to laugh about this in four years.’" "The problem was that the liquidity just left, both in terms of the most important person who could buy it, which was the strategic acquirer. When stock prices fell and interest rates went up, you’re just not as acquisitive." "But now you lump in the fact that AI is creating all these existential questions for enterprise software companies. And you have the depressed public valuations, and you have no profit, so your recovery rate with your lender might even be low. You can’t even take the keys to this business and milk it for dividends." "You have to do a massive restructuring, and that’s a really scary proposition for a lot of private credit funds."

@DeepValue47 Can you please take profits now? God (also pump/dumpers & mass speculation) are giving you the gift of a lifetime… The stock is beyond overvalued and even you know it.

We’re fired up! X-BAT completed its first engine fire, lighting @GE_Aerospace's F110 and taking a major step in the development program. Autonomy for the world. The greatest victory requires no war.