2024 Trends & FLG Partners Celebrates 20 Years of Success

By Laureen DeBuono

In 2024, FLG Partners will celebrate our 20^th Anniversary in business, thanks to the hundreds of clients, referral partners and industry colleagues who have helped us meet our objectives. Because of partnering with these colleagues, we have been able to close:

• 350+ M&A transactions
• 200+ IPOs
• 100+ Divestiture transactions
• And raising over $6B in financing since January 2021

Recapping 2023 Accomplishments and Trends

2023 presented a slowdown in multiple sectors from technology to small-cap biotech – two sectors in which we have historically thrived. Many challenges presented this year, including high interest rates, a lack of equity capital and cash constraints, the impacts of the continuing war in Ukraine, persistent yet ebbing inflation, the never-ending challenges of hybrid work models and now, the Israeli-Hamas conflict in the Middle East.  Every business has had to navigate these business issues strategically and skillfully to succeed. Financial discipline has been “the rule” in 2023, a year which has challenged us all to drive operational efficiency and pare down businesses to stretch cash reserves while still building capacity for growth.

At FLG, we have been very fortunate to help create innovative solutions to build operational strength for our clients by using creative financing solutions, developing partnerships, streamlining headcount, and implementing cash management processes and practices to build working capital. We are encouraged by the accomplishments of our clients as they stretch their cash runways, streamline operationally to control costs and conserve cash, all while keeping their restructured teams motivated and engaged, and meeting their strategic and financial goals.

FLG Partners will end 2023 with higher revenues than 2022, our best year ever. 2023 was in many ways similar to 2022 in that we were able to work in non-traditional sectors and garner referrals from different sources. We have added two superb CFOs to our partner roster, Sandy Gardiner, a highly experienced healthcare CFO for both public and private companies, and William Atkins, a seasoned private and public company technology CFO (and former senior investment banker).

2024 Trends We’re Watching

Looking forward, we are cautiously optimistic about 2024, and what this upcoming year will bring in terms of business activity and the economy:

While recession fears are still shadowing us, we will likely soft-land. Current economic forecasts are that growth in 2024 will continue to slow but a major recession will be avoided. The labor market is still relatively robust, although the tech sector has experienced “controlled layoffs” to streamline and become more financially disciplined. And the Fed has worked hard to beat inflation down. But consumers in Q4 have started to slow their spending down after a “smoking” Q3, and this may forebode economic contraction as we head into Q1-2 of 2024.

The outlook for capital market outlooks is uncertain. Companies await the new year and what that means for capital market access; if access does not happen and companies must continue to scramble for cash, or have to sell on a de-valued basis, M&A may pick up after a quiet Q4 2023. Experts are predicting that buyers will adjust to higher interest rates in 2024 and as such M&A will likely push forward.

The day of reckoning for the hybrid work model is here. Companies want their employees back in the office, with studies showing that increased productivity and innovation from collaboration when employees are together in an office setting.

Digital transformation innovations continue across sectors with increased DT tech investments and spending, particularly in the areas of artificial intelligence (AI), cloud computing, remote access, automation and XaaS (anything as a service). AI is dominating the scene in the Bay Area in particular, and major tech companies are spending heavily in this area to position themselves in this burgeoning sub-sector.  Cybersecurity is still also very front and center for all players and we see activity and spending in this area to continue as well.

Climate change will continue to channel investments into niche areas of opportunity in the energy sector (wind, solar, battery production).

E-commerce continues to be a retail sector driver, but the overall CPG sector is stagnant as consumers tighten their belts. While e-commerce growth has slowed, it represents 11% of all consumer spending, and Amazon will continue to move into new markets to dominate “all things e-commerce”.

The war in Ukraine and the Israeli-Hamas Middle East conflict will continue to attract headlines with implications for economic repercussions from these geopolitical developments. At present, these are hard to predict but could be enormous, both regionally and globally, depending on military and political outcomes.

Lastly, 2024 brings a presidential election in the U.S. and huge turnover in both Senate and House seats in Congress. How the economy performs during the year ahead will have a major impact on federal and state elections along with concomitant social and political issues across the country.

After 20 years, our team at FLG Partners is committed to providing our clients with the strategic insights, tools and practices to successfully navigate through these projected impacts, business cycles and necessary pivots, regardless of what comes next in 2024.   We believe setting the right vision, prioritizing, partnering with the right networks, carefully managing growth, and always keeping a watchful eye on cash and its uses, will keep us all successful in the coming year.

Happy Holidays from all of us at FLG Partners.