Shifting Markets and Early Warnings
As a business owner, now is a good time to review whether you are inadvertently double-dipping on your illiquidity as both a business owner and a private market investor. While the Merger and Acquisition (M&A) market looks strong in 2026, this strength is spearheaded by a few key players. Nevertheless, we see around 750 Architectural Engineering firms needing support each year. Did this drop during Covid? Yes. Did the number of firms looking for exit planning increase accordingly the following years? Also, yes. But, your portfolio may not be able to endure these delays if you are tied up in, potentially, increasingly illiquid private investments.
Yesterday’s news about Blue Owl limiting investor withdrawals showed that while alternatives can present significant opportunity, they also demand additional scrutiny. "When a fund stops letting investors leave, it is no longer a liquidity issue. It is a solvency question."
Meanwhile, crypto currencies are often treated as a Fiat currency hedge, much like gold. Yet their success is predicated on the hope that digital currencies are not too good of an investment, as that would be dependent on the collapse of the dollar. A smart view is that digital assets are to be treated as an insurance policy. Afterall, Bitcoin has no earnings or cash flow to capture.
Scenario Planning helps prepare an organization for plausible futures. As an example, a matrix provides a helpful visualization of the scenario interface (Figure 1). Here, the x-axis measures whether or not the M&A market will weaken or strengthen. Simultaneously, the y-axis considers shifts in both the US and Global financial markets from centralized to decentralized. Both ‘economic inflection’ and ‘digital currency’ are plagued by turbulence, uncertainty, and ambiguity. Clearly, though, ‘Digital Currency’ presents a more novel scenario. By ensuring that today’s M&A strategy, and your business succession strategy, includes considerations around changes to the external environment, you can build flexibility into your holistic financial plan.
Disclosure:
The information presented in this article is intended for general educational purposes and should not be interpreted as individualized financial, investment, tax, or legal advice. Any hypothetical examples, scenarios, or illustrative anecdotes are used strictly to demonstrate financial planning concepts and do not reflect all client results. Because each person’s financial situation is unique, the strategies or ideas discussed may not be appropriate for your circumstances. As an investment adviser representative of a registered investment adviser, we act in a fiduciary capacity and provide advice tailored to each client’s objectives only after adequate understanding of the client’s situation. Before making any financial decisions, please consult with your adviser or another qualified professional.
Neither Hoeven Wealth nor XY Investment Solutions provide tax or legal advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Figure 1
