Rise of the Private Sector

Lynx Equity’s Unique Role in the Burgeoning Private Equity Space

In today's rapidly evolving financial landscape, the distinction between public and private sectors has never been more pronounced. As market dynamics shift, private industry is increasingly emerging as a formidable force, consistently outperforming public markets. At Lynx Equity, we believe this trend is not just a temporary fluctuation but a fundamental change in how value is generated and sustained in the modern economy.

Robbins, Tony, et al. “Simulated Performance of Private Vs. Public Equity.” Cambridge Associates LLC,MSCI, Standard & Poor’s. Simon & Schuster, 2024, p. 3.

The Flexibility of Private Industry

One of the key drivers behind the superior performance of private industry is its inherent flexibility. Unlike public entities, which are often constrained by regulatory frameworks and shareholder expectations, private companies can pivot quickly, innovate freely, and capitalize on emerging opportunities. This agility as a private company allows us to adapt to market changes with a speed that public companies often struggle to match. A key focus at Lynx is further enabling the internal expertise of the businesses we acquire, recognizing their time-tested adaptability.

Long-Term Vision vs. Short-Term Pressures

Public companies frequently face the pressure of delivering quarterly results to satisfy investors and maintain stock prices. This short-term focus can drive decisions aimed at immediate gains, which may temporarily inflate share prices but ultimately undermine sustainable growth. In contrast, private companies are not tied to share prices and are thus less prone to the pitfall of “managing to a quarter.” This freedom allows for investment in long-term strategies that build lasting value. At Lynx Equity, we have experienced firsthand how a long-term vision leads to outstanding results over time.

The Power of Niche Market

Private companies often operate in niche markets where they can dominate without the intense competition faced by public companies in broader markets. These niches allow private entities to develop specialized expertise, create strong customer loyalty, and establish barriers to entry that protect their market position. Lynx, in particular, has operated in its own niche of Small to Medium Enterprises, or SMEs, since 2007. We look for companies with moderate to high barriers to entry, who know their markets well. The result is a business model that is resilient, profitable, and less vulnerable to the volatility that often plagues public companies.

The Strategic Edge of Private Capital

Private equity and other forms of private capital have played a crucial role in empowering private industry. With access to patient capital, private companies can pursue growth strategies that may be unavailable for public entities. This access to capital, coupled with a strategic approach to business development, has enabled private companies to outpace their public counterparts consistently.

Lynx’ Unique Model

The Lynx model presents a unique opportunity for those looking to invest in the booming private equity space. By offering private debt returns for our investors, Lynx provides investment stability through a fixed yield on debt. This allows for fixed returns to be paid consistently over the life of the investment, not just at the end. It also results in two levels of insulation, or protection for investors. First, like any private company, our returns are not correlated with or dependent upon public markets. Second, unique to Lynx, the returns our investors receive are not dependent upon our portfolio's performance, but remain consistent over the period of the investment, supported by Lynx’ strong debt coverage ratio.

Looking Ahead

As the performance gap between private and public industries continues to widen, more attention in the form of investor interest is being garnered. The impressive performance of the private market seems to be more than a temporary trend. After over 17 years of operating in this space, Lynx is confident that the private markets will continue to garner more attention and be an appealing option for investors. We are committed to applying our expertise to the private market space and SMEs to continue driving results for our investors.  

Interested in portfolio diversification into private markets and investing with Lynx? Contact our team to learn more at ir@lynxequity.com.