For the first half of 2018, private equity firms had a strong emphasis on acquiring Technology companies. Here are a few sample transactions:

Private Equity Firms Acquiring Technology Companies – Sample Transactions

For the first half of 2018, collectively, private equity firms acquired Software companies more than any other sector except Manufacturing. Here are a few sample transactions:

The trending private equity investment sectors for July 2018 are highlighted below with a few example transactions.

For the first half of 2018, collectively, private equity firms acquired Manufacturing companies more than any other sector. Here are a few sample transactions:

Reviewing platform acquisitions by private equity firms in the first half of 2018, we see the following ten industries as thematic. The top 2 industries, Manufacturing and Software, were equally represented and dominated the list with more than 2x the number of investments compared to #3 on the list (Technology).

Most readers know that we provide a great M&A research database. However, many readers of our blog are unaware that we also offer a database of investment advisers and have since 2007.

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The trending private equity investment sectors for June 2018 are highlighted below with a few example transactions.

Recently, I’ve noticed an increase in the number of managed IT companies for sale. It strikes me that this is a very fragmented industry that might be ripe for a roll-up strategy.

Based on recent transactions from our database of private equity portfolio companies, the following private equity firms are currently investing in the managed IT space:

Private Equity firms with committed capital have a pool of limited partners who invest in a fund controlled by the private equity management team (the general partner). The private equity firm (the GP) is compensated through a management fee plus a performance fee. This arrangement is often called the “2 and 20” fee schedule, as discussed below.

I’ve been asked the following question on several occasions:

If a publicly traded company is being acquired and it has cash in the bank, would the acquirer need to pay more to include the value of the cash?

It’s kind of a technical question, and the answer is somewhat unintuitive initially, but fairly straight forward once explained with a simple analogy.

Short Answer

The calculation for Enterprise Value (EV) – the actual value of the company – subtracts cash.

EV = (market cap) + (debt) + (minority interest) + (preferred shares) – (cash and cash equivalents)

If this seems backwards, keep reading.