Chris Felderman
Appearances
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
On a post-close basis, our transitional offerings are generally focused around things companies taking on institutional capital for the first time typically have not focused on, which includes accounting and finance support,
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
to enhance and optimize financial reporting, cash management, network and capital management, improved process documentation, and we even provide interim support, such as CFO, VP of Finance, or FP&A assistance.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
And then on the performance improvement and value creation side of our business, we offer solutions like audit preparedness, financial forecasting, budgeting enhancements, data and analytics improvements and implementations, and operational assessments and improvements that really provide true value creation and enhance enterprise value.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
And then on the how, we really offer these solutions through a bench of nearly 100 professionals across our four main offices in LA, Chicago, Detroit, and Dallas, and many of which have a prior big four corporate finance or investment banking background.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
Sure. So, you know, I really got into the industry through my background in Big Four. I started out as an auditor. I moved into a transaction support role, spent several years in the Big Four doing that. ultimately ventured out on my own to start my own transaction advisory consulting firm and spent five or six years doing that. I was eventually introduced to the founder of Palmtree back in 2017.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
They were trying to build a business similar to me in a different market. Really, it allowed me to maintain my entrepreneurial spirit, but also gave me the bandwidth to continue to serve clients better. rather than with just the small team that I had. And so I joined on in 2018 to help build out a transaction advisory group, as well as build a Chicago office.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
And six, seven years later, we've got 25 folks in Chicago, and we've got 100 people across the nation. And we've expanded our offerings, not only in the consulting business, but also offering investment banking services to go along with that, to really round out our ability to help our clients anywhere they are in the investment life cycle.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
All well aware the M&A market in 2024 was quite challenging with large gaps in valuations between sellers and buyers. A lot of deal timelines were drawn out, et cetera, et cetera.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
So we're keenly watching to see if the recent resurgence in deal activity at the higher end of the market will continue trickling down to the mid market and the lower mid market, which is more of the space that we like to play in. So that's one thing we're watching. Another is recent headlines are all about tariffs, right?
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
So we're interested in those developments as they can obviously impact current and pending deal activity on many fronts, such as the effect that they can have on sales or profitability forecasts, which are a major driver of deal value and getting a deal across the finish line.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
We're also watching and paying attention to the effects that they might have on inflation, which also impacts interest rates. And we're very sensitive to that in the M&A industry, right?
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
That can significantly alter the price of buyers willing to pay for a business, not only by making the cost of the acquisition debt more expensive, but also constricting the free cash flow of the company they're looking to buy and thereby limiting its ability to invest in further growth.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
Sure.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
Like you said, my name is Chris Felderman. I'm a senior managing director at Palmtree. I lead our Chicago office. I also oversee the operations of the firm's consulting business, which includes offerings in transaction advisory, accounting advisory, strategic finance, data and analytics, and operations consulting.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
I less so have an opinion on the industries that we're seeing the activity in. It's more so the types of deals that we're seeing the activity in. And I would say we're seeing a lot more carve-outs. Over the past year, corporates that are selling off non-core assets, and that's an area where private equity can really come in and add value in a short timeframe.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
We're also seeing a lot more small add-ons, tuck-ins that our clients are doing where they don't have to take on additional debt to do it. They can fund it with the balance sheet. So those deals are getting across the finish line where at any time there's a need to take on new debt, it can really extend the timeline.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
And our clients are really digging in a lot deeper on the diligence on those deals, whether it be financial diligence or commercial diligence or operational diligence.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
Yeah, I mean, on the buy side, like I said, we've seen increased activity in carve outs and small add ons. So I think we're excited about the momentum there. And then as it relates to the sell side, which we can also help with, we expect in 2025 for there to be an increased focus from LPs on their distributions to paid in capital or DPI.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
So that's going to mean more potential for increased exit activity. And that just provides us with an opportunity really to help our clients prep their portfolio companies for those exits and make sure that they're getting maximum value on those exits.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
And the way we like to describe Palmtree is Palmtree is the modern M&A and operations advisory firm. And I like to explain it a little bit in the what, the when, and the how. So I'll just walk you through that. So in terms of the what,
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
Yeah, I mean, obviously, they want to have a high return on the capital that they have invested, but I think in order for them to reinvest any funds, they're going to get to a point where they say, I'm less concerned about the return you're getting me. I just need to get those funds back so that I can reinvest them. They may or may not reinvest it with the current fund, but
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
they're going to be really focused on getting that cash back in the door. And I think any fund that is able to hang on to an investment and extend the life of that investment right now and find additional ways to add value is trying to do that. But I do think there are going to be a lot of funds out there that kind of the time has run out and it's going to be time for them to
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
move into harvest mode instead of trying to extend the life of the current investments that they have.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
Exactly. I think it's more about preservation than it is about maximizing it.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
I think the first piece of advice I'd give to an evolving leader is that the evolution is a journey and it's rarely ever a straight path. And so you got to ride the waves and you got to grind through the bumps. And when you are perceived externally as a leader, you've probably long been perceived as a leader by those around you. So I would encourage them to continue to be curious.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
Don't be in a rush. to have all the answers all the time and as hard as it can be at times, just try to enjoy that ride.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
You can go to palmtreellc.com to learn more about the firm. And, you know, we've got a section on the website that has the bios of all of our senior leaders. And if you want to send me an email at cfelderman at palmtreellc.com, I'd be happy to share a brief overview of the firm and, you know, our history and the offerings that we provide.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
Our primary objective is to provide perspectives on financial and operational data to enable buyers and sellers to make more informed decisions to drive value creation. When we think about the when, we really provide support to our private equity and corporate clients across the entire investment lifecycle.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
It's great to be here, Scott. Thanks for having me.
Becker Private Equity & Business Podcast
M&A, Private Equity Trends, and Value Creation with Chris Felderman of Palm Tree LLC 2-6-25
In pre-transaction, our offerings include financial and operational due diligence, as well as pre-close accounting and finance operations diagnostics, which includes the people process systems, as well as data and analytics assessments.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
And post-close, our transitional offerings are generally focused around the things that companies taking on institutional capital for the first time typically have not focused on, which includes accounting and finance support, enhancing that and optimizing the financial reporting process, cash management, networking capital management, improved process documentation, and even interim support such as CFO, VP of Finance, or Director of FP&A and the like.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
And on the performance improvement and value creation side, we offer solutions like auto preparedness, financial forecasting, and budgeting enhancements. data and analytics improvements and implementations, as well as operational assessments and improvements that provide true value creation and enhance enterprise value. And we do this through a solution.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
We offer these solutions through a bench of nearly 100 professionals across our four main offices in L.A., Chicago, Detroit and Dallas, many of which have prior big four corporate finance or investment banking experience.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
Yeah, I think it's especially important for private equity-backed portfolio companies that, you know, whether they're purchasing raw materials on an import basis or whether they are, you know, manufacturing overseas and need to bring that product back to the back state side. I think now is a time to really assess what the costs of those imports are doing. And I think
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
Our sense is that these announcements, and generally speaking, the uncertainty around them is absolutely increasing challenges for PE firms. And it's not only in the operations of their portfolio companies, but it's also in their ability to source, evaluate, and ultimately close on those new investment opportunities. And I can
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
go into some detail on some of the short-term risks and opportunities that they can look into, and then maybe some of the long-term as well.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
Yeah, in terms of the shorter term challenges, I think immediate term, portfolio companies, their management teams, even the deal teams that are working on them on the sponsor side, they really need to identify the product and supply chain exposure that each of their portfolio companies have, meaning what key costs either are affected or are going to be affected by current or pending tariffs.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
Maybe they manufacture goods in another country, maybe they import raw materials for production here in the US. Once they understand that, they then need to assess the effect of the cost increases on both profitability and liquidity. How much inventory can the company pre-buy Or how much of any cost increases can it absorb before having to pass some of those costs along to its customers?
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
And how sensitive will the customer base be to those increases? Or are they able to negotiate something mutually beneficial with their vendors to help preserve their margins? And in the case of pre-buying inventory to avoid any short-term tariffs, what are the downstream effects of tying up working capital in that way?
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
I think those are some of the key immediate and short-term assessments that need to be made. And then over the longer term, it's perhaps assessing things like the ability to move suppliers or whether products can be redesigned with components that don't have as much exposure to tariffs. But obviously, those take a little bit longer to play out.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
And given the uncertainty right now, it might not be necessary, but it's something that can absolutely be planned for for the longer term.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
Yeah, well, I think the services side is less prone to the tariffs and that quite honestly, might be where we see an uptick in deal activity, which is more focused on services and items that don't need to be sourced from outside of the United States.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
So if there is a potential silver lining to the environment we're in from a deals perspective, I would imagine that's where a lot of the deal flow will begin to come from if the uncertainty continues.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
Yeah, I think the uptick in the stock market is more driven on whether there's certainty or not. And I think just the shock to the system that happened over the past several weeks, and it's allowed itself to calm down with some recent developments and and changes in the tariffs. And I think people are, and the market in general is getting a little bit more comfort with that.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
Sure. Thanks, Scott. It's great to be here. As you said earlier, my name is Chris Felderman. I'm a senior managing director here at Palmtree. I lead our Chicago office and I oversee the operations of the firm's consulting practice. Palm Tree, we like to consider ourselves the modern M&A and operations advisory firm.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
Not quite back to where we were pre-announcement, but obviously getting closer. I think some of the good news is that not all, like I said earlier, not all middle market, lower middle market companies are significantly impacted by the recent tariff news. So on a deals front, I think deals can continue to happen, say in the financial services,
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
maybe in the healthcare sectors where there isn't a sourcing of components from overseas, and it's more focused on the services side of things. And furthermore, from a silver lining perspective, I think if there is a slowdown in deals and sponsors do need to hold on to their portfolio companies a little longer than they originally anticipated, now's a good time to make additional investments in
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
certain value creation initiatives as a way to enhance that business for when a sale process does begin to make more sense and there is more certainty in the market.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
Yeah, I mean, we've definitely seen a slowdown in deals in our transaction advisory discipline in terms of buy-side volume, but we are seeing an uptick in sort of that sell-side preparedness, sell-side quality of earnings, even in carve-outs. So I think there's potential there, and that's got us excited that there is still a need for consulting services.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
And while it might not be on the deal front that these portfolio companies, there's opportunity there to get out in front of some of these tariffs, and we can be helpful with that. And even when it comes to planning for liquidity or readiness around this, that's where we can really provide value to our clients.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
Thanks, Scott. Thanks for having me on.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
And our primary objective, especially of our consulting offering, is to provide perspectives on financial and operational data to enable buyers and sellers to make more informed decisions to drive value creation. We typically provide support, well, we can provide support across the entire investment lifecycle.
Becker Private Equity & Business Podcast
Navigating Tariffs and Market Uncertainty: Value Creation in M&A with Chris Felderman of Palm Tree LLC 5-9-25
Pre-transaction, our offerings include financial and operational due diligence, so think quality of earnings. We also provide pre-closed accounting and finance operations diagnostics around the people, process, and systems, as well as data and analytics assessments.