Lincoln International's Brian Garfield - how is AI impacting private markets valuations?

Welcome back to the Alt Goes Mainstream podcast.

Today’s episode dives into the nuances of the numbers to discuss valuations, underwriting, and the state of private markets.

We sat down with Brian Garfield, Managing Director and Global Head of the Portfolio Valuations practice within Lincoln International’s Valuations and Opinions Group.

Brian provides valuation and transaction opinion services to public and private alternative asset managers. He leads a team of over 225 professionals, providing strategic oversight for the Global Portfolio Valuation practice which includes both our Portfolio Valuation and Asset Backed Finance teams situated across North America, EMEA and APAC. Brian’s team also produces the Lincoln Private Market Index, Lincoln Senior Debt Index, and Lincoln Default Index. 

Brian and his team specialize in estimating the fair value for an array of financial instruments, including direct investments in senior, unitranche and subordinated loans, as well as preferred equity, common equity, option and warrants. His expertise also includes valuing secondary fund interests, co-investments, and GP stakes.

Prior to joining Lincoln, Brian spent more than six years at Duff & Phelps, LLC, where he advised a wide range of alternative asset managers.

Brian and I had a fascinating conversation about the current state of valuations and underwriting in private markets. We discussed:

• How is AI impacting SaaS company valuations?
• Taking stock of the current fundamentals of private companies.
• Is the “iceberg of deals” melting?
• How indices and benchmarks are bringing a “deeper level of transparency than price” to a market.
• How is continuation vehicle activity impacting private markets?
• How has the growth of evergreen funds impacted the world of valuations?

Thanks Brian for sharing your expertise, insights, and passion about private markets and valuations.

Show Notes

00:00 AI Hype Reality Check

01:01 A Message From Our Sponsor, Ultimus

01:57 Introducing Brian Garfield

04:12 Art Versus Science in Valuations

04:55 Tech Automation Transparency

06:07 Valuation For New Investors

07:35 Entry Price Anchor

08:51 From Entry To Exit

10:06 Cycles And The Public Versus Private Gap

10:45 Lincoln Private Market Index

11:55 AI And Software Bifurcation

16:36 Private Market Health Signals

17:49 2021 Vintage Leverage Trap

19:47 Exit Logjam Continuation Vehicles

21:06 Winners Path To Exits

22:37 Deal Flow Thawing

23:33 Capital Shifts and Yields

25:56 Underwriting Discipline Today

28:52 AI Winners and Specialists

30:38 Energy Shock and Valuations

35:11 Public Private Convergence

36:17 Indexes and Transparency

38:03 Evergreen Cadence Shift

41:26 Standardization and Data Tech

43:09 AI Querying and Backtesting

46:42 Wrap Up

A Word from Our Sponsor, Ultimus

This episode of Alt Goes Mainstream is brought to you by Ultimus, the full-service fund administrator and transfer agent powering asset managers in private and public markets. As alts go mainstream, you need real expertise to handle complex fund structures, connect with key distribution partners, and handle sophisticated compliance, reporting, and transparency demands.

That’s Ultimus: high-tech, high-touch solutions for over 450 clients and 2,500 funds with $775B in assets under administration. Backed by an expert team of over 1,200 employees, they place client service at the core of their business, helping you navigate complexity during your fund structuring or launch and then supporting you through every stage of growth. Whether you’re already in the market or thinking about entering private wealth, you can trust their team’s deep expertise in retail alternatives to help you reach your goals.

Learn more at ultimusfundsolutions.com or email [email protected].

We thank Ultimus for their support of alts going mainstream.

Editing and post-production work for this episode was provided by The Podcast Consultant.