Introduction
We are excited to release the second issue of our monthly newsletter Sector Spotlight
This is a comprehensive newsletter coupled with decks for the current or aspiring investment banker/PE investor, diving deep into the qualitative and quantitative nature of transactions, businesses, and trends across sectors, from the POV of an investment banker/PE investor. The groups are led by incoming investment banking summer analysts & analysts across a range of bulge bracket, elite boutique, and middle market banks.
Unlike other finance newsletters, this will not just simply mention or briefly summarize deals and news but will link to decks that include in depth analysis on a given topic. As this is the first issuance, we’ll be covering three sectors: 1.) Media & Entertainment, 2.) , and 3.) Healthcare. We hope you enjoy this month’s edition and look forward to bringing you monthly updates moving forward. Enjoy!
Best,
Jagger Lambert lambertjagger@gmail.com
James Concepcion jamesconcepcion217@gmail.com
Technology
October 2023 Deals:
- NASDAQ, raising approximately $1.2 billion. There were no underwriters on this transaction, instead, Maxim Group served as the financial advisor for reAlpha
- On October 23, 2023, Vista Equity Partners agreed to acquire a 65% majority stake in EngageSmart, a leading provider of vertically tailored customer engagement software and integrated payments solutions. The all-cash transaction was valued at approximately $4.0 billion. Vista is paying $23.00 per share, which represents a 23% premium to EngageSmart’s closing share price on October 4, 2023. Upon completion of the transaction, affiliates of General Atlantic, a leading global investor, will hold approximately 35% of the outstanding equity
- Atlassian Corp acquired Loom for $975 million in cash and stock on 12 October 2023. Acquisition strengthens Atlassian’s portfolio of product offerings. The deal is expected to close in 3rd quarter of Atlassian’s FY 2024.
- Omnicom Group acquires Flywheel Digital for $885 million on 30 October 2023. Acquisition looks to enhance Omnicom Group’s growth profile. Deal is expected to close by the end of 1st quarter of 2024. JP Morgan Chase, Numis Securities and Rothschild and Co served as advisors to Flywheel Digital. Moelis & Co served as advisor to Omnicom Group.
- Health automation Olive AI, hyped AI startup, is shutting down and selling remainder of assets. Concerns over its software’s efficacy, executive departures and layoffs previously signaled the end for the company.
October 2023 Trends
Large Language Models:
- ChatGPT has started to roll out new features in both voice and image recognition and production. This will allow users to have verbal conversations and use visual cues to interact with ChatGPT
- The Large language model market growth is expected to grow from approximately $12.8 Billion to $40.8 Billion in 2029 at a CAGR of 21.4%
- Baidu Inc., a multinational internet and AI company declared that their LLM model (Ernie 4) can rival OpenAI’s GPT-4. Ernie is infused into Baidu’s products and has surpassed 45 million users
- Biden administration announced executive order on AI (US government’s first move targeting the technology). Order requires some AI companies to share safety test results with federal government prior to model release and also call for federal agencies to create set of security standards around consumer privacy, AI use in government, AI practices in healthcare, among others. G7 also agreed to voluntary code of conduct for companies developing advanced AI systems. They urged companies to reduce and prevent risks in AI systems and misuse in their AI products
5G:
- The 5G market size is expected to grow from approximately 141.28 billion to 1.87 trillion throughout 2023 to 2029
- The 5G Enterprise Value Market Size is expected to grow from $3.1 Billion in 2021 to $34.6 Billion in 2029 at a CAGR of 27.3%
- Smart Cities and autonomous vehicles have started undergoing testing and deployment across the world. Autonomous vehicles
Cyber Security:
- The Cybersecurity market is forecasted to go from $172.3 Billion to $425 Billion from 2023 to 2029 at a CAGR of 13.8%
- The Banking and Financial Services industry holds the largest share in the cyber security market and is expected to rise due to the increase in online activities, across banks, insurance institutions, and other financial institutions
- The Healthcare sector also seems to be on the rise in the cybersecurity market space with the increased adoption of digital customer healthcare records
Other Trends
- The Biden administration has announced a ban on the export of advanced chips and chip-making equipment to China, set to take effect in 30 days. This move is part of a broader strategy to slow the advancement of China’s military, particularly in the field of artificial intelligence.
- The ban includes chips from market leader Nvidia, specifically their H800 and A800 products, which had previously attempted to bypass export restrictions by unveiling chips with reduced performance.
- The administration is “laser-focused” on this issue, demonstrating its commitment to national security The Applied AI market is predicted to increase from $17 Trillion to $26 Trillion through improvements in NLP and data analytics
- Companies like AMD, NVIDIA & intel saw share price declines due to the ban. ASML CEO estimates that ban would affect 10%-15% of company sales to china
- Organizations that utilize ML for daily operations have seen, on average, a 40% reduction in development resources and have seen project time frames reduce to 1/8th to 1/10th of the initial project time
