Morrison Foerster and ICM Institute, a nonprofit research arm of the Impact Capital Managers (ICM), a membership association of leading private capital funds, published a new report, “Strengthening Outcomes: Impact and Financial Value at Exit,” the second in a series that explores different aspects of impact investing and how an impact-focused approach can generate alpha for investors.
The report focuses on the impact-specific drivers that most influenced exit outcomes for ICM portfolio companies as well as specific considerations that impact investors face at exit. ICM Fellow Divya Walia, a dual-degree MBA/MIA Candidate at Columbia Business School and SIPA, was the lead author for the report under the direction of Susan H. Mac Cormac, Global Co-chair of the Environmental, Social, and Governance (ESG) and Social Enterprise + Impact Investing practices at Morrison Foerster.
Susan adds: “Impact investors and all market participants should be encouraged by these findings. Our study shows that it is certainly possible to structure an exit event that not only achieves an investor’s impact goals but meets or exceeds financial expectations and avoids greenwashing. As exits involving impact investing have become more prevalent, the sophistication of effective legal tools to protect impact at exit has evolved as well. Impact investing in the private markets can and should result in positive outcomes, both for the investor and for society at large.”
The report shows that almost two-thirds (65%) of impact exits meet or exceed financial performance expectations. This first-of-its-kind study draws on a sample size of 230 exits from ICM members, each of which manages a market-rate impact fund and is therefore uniquely positioned to provide data and insights into the success of impact exits and the key drivers of that success.
Read the full report.
Learn more about MoFo’s ESG and Social Enterprise + Impact Investing practice strengths.
Morrison Foerster and ICM also published a related report in April 2021 that focused on “Legal Innovation in Impact Investing” and explored the variety of legal tools and processes used by private capital investors to protect and enhance investments. Read the April 2021 report.