The private equity sector has experienced tremendous growth over the last five years, in absolute number of private equity firms, in the funds committed to the sector, in the number of executives working in the industry and in the number of portfolio companies acquired.

In fact, private equity investments have become so prolific, that few industry sectors (if any) remain untouched by private equity. Ten years ago, many business owners, especially in the mid-market, were unfamiliar with private equity. Yet, today, most businesses have interacted with private equity in some fashion, either through an acquisition, growth capital injection, introductory meetings & preliminary conversations, or, at the very least, some form of marketing outreach.

Growth in Private Equity Firms

The graph below shows the trend in the number of PE firms over the past 5 ½ years, from our M&A Research Database at www.PrivateEquityInfo.com.

Because there are some caveats (discussed below) that play into the exact quantity of firms shown, this graph is best viewed as indicative of the overall trend in private equity over time. Clearly, the trend is one of growth. In fact, ~12% compound annual growth over 5.5 years.

As the legality of cannabis has shifted over time in some U.S. states, a few private equity firms have made investments in the cannabis industry. I thought it might be interesting to see how they have invested in this space and which firms have made those investments.

Below are private equity backed cannabis transactions from our M&A Research Database at PrivateEquityInfo.com.

We reported logistics as a sector of investment focus for private equity firms in May 2019. However, logistics, as an industry sector, has been increasingly more interesting to private equity firms for some time now.

Our M&A Research Database shows 544 current PE-owned portfolio companies in the logistics space and an increasing PE appetite for logistics companies over time.

When we think of private equity, most of us tend to think of largest firms, like Carlyle, Bain, Warburg Pincus, Advent International, KKR, HarbourVest Partners, General Atlantic, H.I.G. Capital, Blackstone in the U.S. Or, perhaps we think about some of the largest firms outside the U.S. – EQT Partners, CVC Capital Partners, Hg Capital and Bridgepoint. These are all big names and very successful firms within the private equity industry.

However, what most people do not realize is that these firms are in the minority. They capture a lot of the news headlines and the media spotlight precisely because they are large. But the reality is, most private equity firms are quite small.

The trending private equity investment sectors for May 2019 are highlighted below with a few example transactions.

The trending private equity investment sectors for April 2019 are highlighted below with a few example transactions.

Medical device companies often provide two attributes highly valued by private equity firms – high margins and good growth metrics. It’s no surprise then that we noticed a trend of private equity firms investing in Medical Device companies. Today, we explore this trend across a 20-year horizon (for platform investments).

Last month, we commented on private equity firms investing in IT security companies. Expanding on that, this study explores the overall trend of PE firms investing in Cyber, Internet or Data security providers. This is a significant growth market, given every industry’s increased reliance on IT, software and data, coupled with the devastating effects of a security breach.

Private Equity Investment Trend – Cyber Security

The chart below shows the number of private equity investments in cyber security companies (excluding add-on investments) over the last 20 years.

To be clear, I have only included security as it relates to IT, software, data, etc. and not surveillance, home security systems nor related companies that provide physical security as a service.

We have previously shown the meteoric rise in private equity backed Software-as-a-Service (SaaS) companies. This post takes a closer look at these SaaS companies and explores the end industries they serve.

Private Equity Investments in SaaS Companies Over Time

The chart below shows the number of private equity platform investments in SaaS companies by year (I excluded add-on investments). As expected, there is a steep upward trend, although it should be noted that Q1-2019 (with 15 platform acquisitions) was not on pace with Q1-2018, which had 20 platform acquisitions in the SaaS space.

Caveat – many, if not most, SaaS investments are still earlier-stage venture capital investments, which we do not track. The chart below therefore only includes platform acquisitions by private equity firms.

The trending private equity investment sectors for March 2019 are highlighted below with a few example transactions.