We have previously reported that private equity, as an industry, is moving down market, increasingly investing in smaller deals. The question is, what company size ranges attract PE firms? In other words, how small, how big and are there any sweet spots in terms of preferred portfolio company size for new platform acquisitions?
Compiling data from www.PrivateEquityInfo.com, the charts below show the platform acquisition criteria metrics for the private equity firms in our database.
To simplify, each chart shows the minimum requirements for each metric (for example, minimum revenue, min EBITDA, etc.). We also have data on the maximum range for each metric, but I will group those together for a later study. In other words, this study is about the minimum deal size requirements for private equity firms.
To be clear, this data is not based on transaction comps, but on the stated, desired range for platform acquisitions. (Note: we only record the size preferences for platform investments because there are often no minimums for add-on investments).
- 60% of PE firms will look at deals with revenue less than $10 million.
- 88% of PE firms will look at deals with revenue less than $25 million.