ARR financing: Tech lending faces growing pressures

As public market software company valuations decline and recapitalisations slow, sponsor and lender interest in advancing loans to companies on an ARR basis has either reduced or become more conservative.

As technology businesses have grown in favour, lenders have adapted to a different type of financing – only to now see it come under scrutiny as interest rates rise and economic growth slows.

At around the time of the initial covid outbreaks in early 2020, technology emerged as a strongly favoured sector and was a major beneficiary of the boom in M&A that followed in the latter part of that year.

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