Structured Equity or Special Situations

Structured Equity or Special Situations

Author: Adam Gross, Managing Director at JEGI CLARITY

Many private equity funds that traditionally lead leveraged buy-out (LBO) transactions for majority control of companies are creating “Special Opportunity” or “Structured Capital” funds to provide middle-market companies with flexible financing solutions, offering founders and CEOs with an opportunity to raise capital quickly to solve financing needs. These investments are typically structured as minority investments, and the capital can be used by founders/CEOs to solve short-term financing needs, invest in growth initiatives, and/or invest in operations.

Many times, these financing solutions can address situational complexity, from companies seeking capital to pay down debt, to businesses experiencing difficulty securing capital from their usual sources. Furthermore, these solutions can aid founders/CEOs who are seeking to opportunistically invest to support growth in their businesses, without having to give up control of their companies.

One interesting solution for middle-market companies is “Structured Preferred Equity”, an innovative way for companies to raise capital without diluting their ownership stake as much as they would with traditional debt or equity financing. This can be especially beneficial for founders/CEOs who want to maintain control of their companies, while raising capital in a relatively short time – typically within four weeks. For investors, this type of equity investment can provide more robust protection than traditional common equity, which enables investors to move faster in providing the financing, given the lower risk profile.

Here are the general terms and types of structured preferred equity a founder/CEO should expect:

Interest – preferred equity offers the investor an interest payment typically paid as Paid-in-Kind (PIK) interest, which accrues over time and is paid at a later date; this enables the company to conserve cash and utilize that cash for operational investments and growth initiatives; current market rate is in the low double-digit percentage range

Liquidation Preference – preferred equity may provide downside protection to the investor by guaranteeing a certain level of return, before the common equity is paid; for example, a 1.25x liquidation preference guarantees the investor a 1.25x return on their investment before the common shareholders receive any payment

Participating Preferred – typically, this type of preferred equity provides downside protection via a liquidation preference, while also offering the investor the opportunity to participate in the common equity value of the company; as such, once the preferred equity investor receives its interest payments and guaranteed return, it then participates in the common equity waterfall, enabling it to partake in the company’s upside

Convertible Preferred – in this type of preferred equity, the investor chooses either the preferred value of the security or the converted value of the common shares; basically, the investor chooses between the greater of the two calculated values, providing the investor with downside protection, as the minimum value is the preferred value, while offering the investor the option to participate in the company’s upside via the common equity

A few things to consider, structured preferred equity can be more expensive than traditional debt or equity financing, as investors typically demand a higher rate of return for this type of investment.  Structured preferred equity can also limit the flexibility of the company, as the terms of the preferred stock may include certain restrictions on the company’s operations or decision-making.

Another important aspect to consider is that structured preferred equity is typically not for companies that are in very early stages of development.  It’s more suitable for companies that have a track record of generating revenue and profitability and are looking to expand/invest in growth.

In Conclusion  

Structured preferred equity can be a highly flexible, fast and effective way for companies to raise capital.  It’s important to understand the pros and cons before deciding, and experienced investment banking professionals will help you understand this financing option and opportunity better, can introduce an array of firms that offer this type of financing solution and will help companies and founders align with the best partner at the best terms. 

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2023 Ready, Set… Reset.  Doing More with Less

2023 Ready, Set…Reset. Doing More with Less

As we look forward to 2023, we expect it to be a year of resetting and cost cutting; a time where CEOs will be asked to do more with less.  Set against these macro-conditions, however, there are reasons for optimism.  

Authors: Chris Karl, Chief Business Development Officer, North America & San Datta, Partner, EMEA

The post-pandemic period of exuberance for much of the Media, Information and Technology sectors which saw sky high valuations, record private equity investment and highly leveraged growth has definitely retreated through the second half of 2022 due to an array of factors from macro to micro.  Whether you chalk it up to supply chain disruption, political turmoil, challenging capital markets, tightening monetary policy or the war in Ukraine, the second half of 2022 saw a dramatic fall of 33% in global M&A activity compared to the first half, resulting in total 2022 M&A volumes being down 37% on 2021.

As we look forward to 2023, we expect it to be a year of resetting and cost cutting; a time where CEOs will be asked to do more with less.  Set against these macro-conditions, however, there are reasons for optimism.  

Across our sectors, we continue to see revenue growth and profitability coming from companies that integrate tech-enabled services and expand offerings to drive positive outcomes for customers.  These powerful underlying drivers, coupled with robust corporate balance sheets, will continue to drive both growth and M&A appetite from strategic acquirers through 2023 and beyond. 

From a private equity perspective, an estimated US$2Tn of dry powder in the hands of global private equity funds1 and a rapidly evolving media and technology marketplace provides the foundation for more investor-led M&A and capital deployment in the coming year.  

While the exact timing is uncertain, we are confident that M&A in the mid-market will return to robust levels of activity as debt markets ease and the wave of digital transformation continues to roll across industries. 

So, what are some specific areas of growth and opportunity for 2023?  

Digital Services: consolidation continues 

Digital services growth, both geographic and through the marketing stack, will continue to thrive and, with a market of over $100Bn in North America and the UK alone, the market opportunity remains huge for the winners. The increasingly long list of private equity backed digital platform plays such as Dept, Bounteous, Material+, Wpromote, Valtech and Tinuiti will continue to scale through acquisition and reach further into adjacent markets bringing the CMO closer to the CTO and CIO.    

Events: face-to-face is back… and it matters 

At the epicentre of B2B lives the Events space, a sector that saw an unprecedented post-pandemic bounce-back during 2022. With the North American market forecast back at 97% of 2019 levels in 2023, and Europe at 96%, momentum has returned, and M&A is back on the agenda.  The physical channel remains attractive to business, the interweaving of in real live (IRL) and digital to create a drop-in, drop-out hybrid world has paved the way forward for the industry, and we expect to see buyers focusing on companies which enable this proposition, for example Clarion’s acquisition of Quartz or Brunico’s acquisition of NAPTE.  

Content Creation: a new revolution?  

Technology has transformed the nature of dissemination of content via a rapidly expanding universe of service providers that help media owners and brands capture, curate, distribute, and monetize their content assets, in turn driving a wealth of M&A and investment. Be it strategic, such as Unity’s $1.6Bn acquisition of Weta Digital’s tech division, or from private equity, such as Bridgepoint’s investment in multi-channel content platform, ITG, or PSG Equity’s investments into Backlight, we anticipate that new technologies will transform the way content is produced, automating much of what was historically done in studios, on production sets and on location. We are already beginning to see AI driven content creation technologies delivered through high-end animation and more sophisticated visual effects. 

These capabilities will bring down the cost of production which is a welcome trend in these inflationary times. 

The Metaverse: one for all or all for fun?  

Although we are not at a mass adoption point for Web 3.0 or VR/AR, demand for connected communication, gaming, eSports and content will play into the metaverse becoming more than just a concept for many.  Indeed, we anticipate more investment and M&A activity in the core technologies that drive Web 3.0, in service providers and technology tools that help B2B users and in connected consumer content.

Witness for example, Microsoft’s government contested $69Bn acquisition of games publisher Activision or, on a smaller scale, Arogo Capital’s $665Mn acquisition of EON Reality, a provider of AR/VR solutions for virtual offices. 

CTV: a new advertising battleground

The “Future of TV” is here as the connected TV (CTV) market is the fastest growing media channel at over 23% in 2022 and forecasted growth will continue in the coming year as Netflix introduces an ad supported tier.  Advanced formats will be introduced, and M&A will follow, with deals like LionTree’s acquisition of Transmit.Live to start the year.  Demand for content will drive innovations that serve individual homes with customized streams supported by dynamically inserted relevant ads and CTV moves into “must buy” status with media buyers.  

ROI: making it count 

Over the last couple of years, we have seen a real acceleration in ROI-driven sales and marketing solutions powered by content, data and technology which are increasingly taking budget from traditional advertising and marketing spending. The economic slowdown will only make these businesses more attractive to brands and corporates as every marketing dollar gets more scrutiny. Whether this is the “tip-of-spear” +$25Bn sales acceleration market populated by the likes of ZoomInfo and Cognism, or further up the funnel, the $10Bn content-led affiliate marketing world, expect to see large scale integrators looking to acquire ROI-focused capabilities.

Other catch phrases and technology we predict you’ll hear a lot more about in the coming months include Chat GTP, Applied AI, ESG, Sustainability, Staff Augmentation and Cloud Migration. 

You will also want to pay attention to Google and Facebook’s waning hold on advertising budgets, TikTok’s issues with their ownership structure in China, and Musk’s progress with remaking Twitter.  As these leading digital platforms face headwinds there is potential for upstarts, challengers, and the “others” to grow revenue even in a down year.  That’s good news for many companies.        

In Conclusion  

Contemplating what to watch out for in 2023, we are reminded that even in the face of macro headwinds, the digital and technology revolution charges on.   

Entrepreneurs and founders always find a way and often it’s on the back of technology that makes it all possible.  2023 will be a year where resilience breeds a new collection of winners, solidifies new and efficient use cases for hyped technologies, and the beginning of a new economic cycle of prosperity begins.     

1 S&P Global Market Intelligence

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Power of 5: The New Paradigm for Insights

“Power of 5”
The New Paradigm for Insights

5 Leaders, 5 Questions, 5 Minutes

The New Paradigm for Insights

Introducing our latest Power of 5 series. We ask 5 industry leaders 5 questions in 5 minutes to gain insight on how they are succeeding in today’s market.

In this series we examine the research, insights, and measurement sector, how that sector has evolved over the last 18 to 24 months, and what that means for M&A.

Over 5 weeks we interviewed 5 selected executives from leading corporations. Topics of discussion included current challenges facing clients, learnings from the last two years, and M&A criteria going forward.

Key Takeaways

  • There is an increasing need to demonstrate impact beyond delivering insights and contribute more directly to the growth ambitions of clients.
  • Clients need a quicker and better understanding of the changing marketplace. Companies need to help clients understand, predict, and act on change.
  • It is important to have an M&A program that is embedded and aligned with your company’s current and future needs.
  • Given the broader macroeconomic environment, clients need data in real time to validate their decisions.


Kristof De Wulf, Chief Executive Officer,

Barrie Brien, Group CEO,

Tugce Bulut, Founder & CEO,

Christoph Haschka, Group Director of M&A,

Matt Britton, Founder & CEO,

Full Interviews Below

Kristoff De Wulf speaks with San Datta
Tugce Bulut speaks with San Datta
Matt Britton speaks with Kevin Moore
Barrie Brien speaks with San Datta
Christoph Haschka speaks with Michael Hirsch

I believe in innovation and that the way you get innovation is you fund research and you learn the basic facts.

Bill Gates

Shortages in high-end animation capacity is driving M&A on a global scale

Shortages in high-end animation capacity is driving M&A globally

Rising demand from streamers and studios for high-quality animation content outpacing supply of quality capacity on a global scale

Author: Jonathan Davis, Partner at JEGI CLARITY

Contact us or email us at if you wish to learn more.


With high interest rates, inflationary pressure and a looming recession, it’s not a surprise that streaming companies and studios are altering course and implementing revised content strategies. The heightened necessity to demonstrate shareholder returns, or at least a path to profit, means studios are looking carefully at their production slate to work out what to cut and what to keep.

While there is an argument to say that theatrical releases might be impacted by a downturn, studios, and particularly the streamers will continue to invest in content that attracts and retains subscribers. Naturally, genres such as “high-end” Episodic Drama as well as Feature Animation, could therefore take centre stage.

With several streaming portfolios underweight in Animation, the continued thirst for high-quality output is outpacing the industry’s ability to service that demand due to a shortage of quality capacity on a global scale. According to FTI Consulting analysis, CG Animation Services grew significantly in 2021 to $2.3bn and forecast to reach $2.9bn by 2025 driven by a material increase in Digital Episodic and Feature content.

A buoyant M&A market

This shortage of capacity has led to a series of M&A transactions over the last 24 months, with major platforms, such as Netflix, taking matters into their own hands by securing VFX and Animation capacity through a series of acquisitions including Scanline VFX and animation studio Animal Logic as well as independents such as Framestore who opportunistically acquired Company 3 and Method, and Cinesite who have made three animation acquisitions, looking to capture greater market share.

Seeking to capitalize on positive sector tailwinds, Private Equity have also been heavily involved in different transactions, including EagleTree investing in FuseFX, Aleph investing in Framestore or Key Capital Partners investing in Jellyfish Pictures, all transactions that saw JEGI CLARITY involvement.

Other key trends (for another blog) are leading to yet more activity, from evolving technologies such as Virtual Production driving Sony’s recent acquisition of Pixomondo, to the advent of Web 3.0 environments encouraging games engine pioneer Unity to acquire Peter Jackson’s iconic studio, Weta‘s tech and tools, in a sector defining transaction.


While the market is (perhaps) pausing to take stock of the wider economic environment, we continue to believe in the long-term health of the sector, with film, TV, advertising, gaming, theme parks and various incarnations of the “metaverse” all needing an increasing volume of VFX and Animation studio services.

With that in mind, we expect to see further M&A activity in the coming months as investors seek to cash in chips from the current incarnation of the “golden age of content” and VFX houses and Animation studios attract capital to invest in tech, build capacity and broaden capabilities. Following recent difficulties announced by Technicolor, perhaps one of the next defining transactions is just around the corner … an interesting time so watch this space!

Content & Commerce: A New M&A Battleground

Content & Commerce:
A New M&A Battleground

Key Highlights

Global e-commerce revenue is expected to reach$5.5 trillionin 2022, with20%of all global retail sales expected to take place online

Rapid growth in U.S. affiliate marketing spend to$9 billiondriving$70 billionin e-commerce sales

Publishers actively focusing on acquisitions to diversify beyond traditional ad & subscription revenues, deepen vertical reach and accelerate growth

Private Equity increasingly seeking to build exposure to the sector with a focus on building scaled platforms, organically and through aggressive buy and build strategies

Content is Driving Commerce


Publishers produce content around transactional topics, but do not capture the purchase


Retailers power transactions, but have limited insight into consumer intent and behavior

Large and Growing Addressable Market

Addressable Market Overview
  • E-commerce continues to take a larger share of overall sales
  • Performance based digital ad spending has been the leading digital ad model representing 67% of spending in 2021
    • The retail sector comprises 50% of total performance marketing spend but accounts for 75% of total revenue generated by advertisers
  • Performance based marketing reigns supreme as it enables retailers to pay the publishers when a specific action is completed, making it easier to measure, track and attribute success delivering tangible ROI and reducing risk for the retailer
  • 16% of all online orders are generated through the affiliate channel

Right now, commerce is the hot, hot thing

Neil Vogel, CEO, Dotdash Meredith

Select Participants

Esports Sector Update

Esports Sector Update

Key Takeaways

Gamers and Other Super Users are an Attractive Audience

  • Gamers belong to an attractive demographic: young, affluent, educated, and technologically savvy
  • Gamers are highly aware and proficient in using cutting edge technologies such as NFTs and crypto – the space is an excellent incubator for new tech

Super Users tend to be younger and more affluent than their counterparts, making them more valuable to technology and media companies

Strong secular growth potential

  • The gaming industry has double-digit growth historically and very strong growth prospects going forward
  • Overall strong growth attributable to increases in both: spend (p) and audience (q)

Outperformance through Covid

  • Gaming revenue grew +20.0% (+11.2% outperformance) in 2020
  • 80% of business in esports and gaming see covid as a positive impact on their business, creating a new watermark

COVID has accelerated the capture of prevailing esports audience growth trends furthering the paradigm shift towards interactive digital media consumption

More than games

  • 60% of gamers have participated in a non-gaming activity or event inside a video game engine within the last 12 months
  • Event types include watch parties, concerts, graduations, visiting virtual recreations of real-world locations

Highly attractive business models ripe for investment

  • Gaming and esports businesses have high growth potential and scalable operations
  • High-quality assets are at the critical inflection point of achieving profitability and generating cash flows
  • All stakeholders are looking for partnerships to scale the business to the next level – find the business within the science project

Power of 5: The Power of the Network

“Power of 5”
The Power of the Network

5 Leaders, 5 Questions, 5 Minutes

The Power of the Network: Evolution of the Engagement Model Series

Introducing our latest Power of 5 series. We ask 5 industry leaders 5 questions in 5 minutes to gain insight on how they are succeeding in today’s market.

In this series we explore the evolution of engagement and networking models across the Business Information ecosystem in driving business decision making and how M&A is playing a part in that evolution.

Over 5 weeks we interviewed 5 select executives from leading corporations. Topics of discussion included current challenges facing clients, learnings from 2021, and M&A criteria going forward.

Key Takeaways

  • Engagement and networking models are becoming more complex, and the pace of change is accelerating
  • Trust is the new currency. Businesses that can build that trusted relationship with their clients will create value for their shareholders
  • Winners will be defined by their level of customer intimacy. Companies that can genuinely combine engagement, data and insights to understand customer behavior and build relationships will outperform
  • Increasing importance of simplification and verticalization to be able to offer the in depth, granular business intelligence that corporate decision makers need
  • M&A will continue to play a key role in refocusing and reshaping businesses, both through acquisitions and divestitures


Jessica Cole, President & CEO, Becker’s Healthcare
David Wilkie,
CEO, World 50
Gehan Talwatte,
Information/Data Entrepreneur and Non-Executive Chairman
Matt Peckham, VP, Corporate Development, Gartner
Jon Slabaugh, CFO & SVP of Corporate Development, FiscalNote

Full Interviews Below

Jessica Cole speaks with Kathleen Thomas
Gehan Talwatte speaks with San Datta
Jon Slabaugh speaks with Scott Mozarsky
David Wilkie speaks with Kathleen Thomas
Matt Peckham speaks with Adam Gross

Whenever you see a successful business, someone once made a courageous decision.

Peter Drucker

Q3 Public Market Update

Q3 Public Market Update

Key Takeaways

Total equity market value down by 2% since July 2021

Following strong growth through early 2021, the Media, Marketing, Information & Technology equity markets encountered some turbulence towards the end of Q3, leading to a drop in value over the period of 2%, in line with benchmark indices which have fallen by 1-3% over the same period.

2021 revenue growth of 17% across all sectors

2021 forecast revenue growth remains robust across all sectors at 17% vs. 2020, led by +28% growth across e-commerce and digital media, and in particular verticalized e-commerce and publishers & lead generation.

2021 EBITDA growth of 36% across all sectors

Strong outlook for 2021 EBITDA growth continues, with virtually every sector expecting double-digit growth vs. 2020, other than for specific sub-sectors which continue to experience fall-out from Covid-19 (e.g. Events).

Macro-economic growth concerns have led to recent declines in the public equity market, however, Q3 2021 earnings season will provide further sector specific insight into how the wider macroeconomic trends are affecting individual companies across these sectors.

The total market value of the Media, Marketing, Information and Technology Sectors has decreased by 2% since July 2021

Q2 Public Market Update

Q2 Public Market Update

Key Takeaways

Total equity market value up by 7% since April 2021

The Media, Marketing, Information & Technology public equity markets continue to prosper, with the total equity market value up by 7% since April 2021.

2021 revenue growth of 17% across all sectors

Led by +28% growth across the eCommerce and digital media sectors, 2021 forecasted revenue growth remains strong across all sectors at 17% vs 2020. Notably, the Marketing Technology sector is also forecasting strong year on year revenue growth of +20%.

2021 EBITDA growth of 17% across all sectors

Favorable outlook for 2021 EBITDA, with nearly all sectors expecting double digit growth vs. 2020. Very positive outlook for Digital Media vs. 2020 with several sub-sectors including search and social media expecting +30% year on year EBITDA growth.

Valuation environment remains robust with the Media, Marketing, Information & Technology markets having increased by 7% ($975bn) since Q1 2021. This is underpinned by strong forecasted 2021 revenue growth across all sectors, with an average of 17% across the market, representing total incremental revenue across the market of nearly $455bn.

The total market value of the Media, Marketing, Information and Technology Sectors has increased by 7% since April 2021

AdTech and MarTech emerge as leaders of TMV growth in Q2 2022

  • The main drag on TMV growth through Q2 2021 has been eCommerce. While the growth outlook for these sectors remain positive, the sector was able to withstand the decline in Price Comparison and Consumer Verticals and saw TMV growth of 4% in Q2
  • Investor demand for businesses exposed digital transformation solutions and best-in-class CX is similarly reflected in TMV growth in both Tech & Consulting Services (up 7%) and Insights, Data, Analytics (up 12%)
  • The Digital Media sector, led by companies such as Facebook, Snap and Google, also continues to perform, up 7% ($4,015bn of TMV) over the period. The sector benefits from powerful tailwinds, including strong and growing demand  for performance marketing

Forecast 2021 revenue growth of +10% for many sectors

  • Strong 2021 revenue growth is projected by current market forecasts for nearly all sectors. The growth is driven by powerful tailwinds across many sub-sectors and a “bounce-back” in revenues in those sectors most impacted in 2020
  • Total revenue growth is forecast at c.17% from 2020 to 2021, signifying an aggregate increase in revenues across all sectors of close to $455bn, with double-digit percentage growth expected across many sub-sectors

Driving double-digit EBITDA growth for 2021

  • eCommerce is expected to have the strongest revenue growth, increasing by 28% to $997B, showing a limited correlation with the change in TMV
  • With Publishers & Lead Generation being the key sub-sector of growth and benefitting from demand from the eCommerce vertical, the Digital Media sector is forecast as a high performer with growth of 28%

Current market forecasts show that FY21 revenue growth across the Media, Marketing, Information and Technology sectors is expected to be 17% with 17% average EBITDA growth across the sectors in the same period

Market Research Sector Update

Market Research Sector Update

Key Takeaways

Sizable global market at $40B

Increasing to $80B with addition of analytics meaning ample addressable market to chase and capture.

M&A activity in the sector is increasing

Consolidation from existing players and increasing appetite from Private Equity is driving activity in the space.

Spend on research is recovering quickly

Companies need a better understanding of post-2020 markets and how consumers now think and feel.

Marketplace winners will optimize core market research while positioning for success in digital and data

Companies that can provide business leaders with agile, data-backed market analysis across media platforms are expected to be the most successful.

There is a sizable opportunity at the convergence of traditional research advisory, user experience, customer experience, experience management, and digital transformation.

M&A playing an active role

Large scale consolidation is reshaping the landscape as digital agencies, consultancies and SaaS vendors encroach on market research budgets.

Recent sector transactions

As vendors vie for scale, growth, and wallet share – advertising agencies have increasingly acquired market research companies to pursue value added services and new capabilities.

The existing sector landscape is evolving as market players focus on new opportunities

Global agencies and measurement companies are exposed

  • Businesses with flat and declining revenues are looking at cutting costs and resources leading to vulnerable accounts and talent drain.
  • M&A activity is increasing as a result with businesses looking to divest, restructure or hold for sale.

CX technology vendors are taking mind and wallet share

  • SaaS vendors are seeking access to enterprise client relationships and channel partners.
  • These vendors are also able to turn up the M&A where others cannot compete on price.

Large scale consolidation reshaping the landscape

  • Firms looking to return to growth through scale as well as bridging the current gap between research, insights, and marketing.
  • Service set expansion pursued as a way to increase mind and wallet share.

Large cap Private Equity active in the sector

  • Private Equity are being attracted by the sizable, fragmented, and disrupted market.
  • They understand the value of research and are recapitalizing to help re-define the market for a digital era.