When investment banks work on transactions involving private equity, do they often use the same law firm to close the deal? I probed the data to find out…

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

Portfolio companies currently held 5 – 7 years are likely ripe for an exit from their private equity owners. Industry concentrations within this aged group of portfolio companies might provide leading deal flow indicators. These industries, and certain sub-sectors within them, may have tidal changes of ownership as private equity firms convert equity to liquidity to provide returns to limited partners.

Using our database of private equity portfolio companies, I identified four industry sectors that are thematic in the U.S. portfolio companies currently held between 5 and 7 years:

1. Manufacturing
2. Technology
3. Medical / Health
4. Oil & Gas

No surprise really, since these are large industry categories. Consequently, for each industry above, I looked for sub-sector concentrations, discussed below.

This one minute video demonstrates how to best search our database of investment banks to quickly find and connect with targeted deal makers.

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Video Transcription

Use Private Equity Info to quickly find suitable M&A investment bankers and intermediaries. Filter M&A firms by location and typical deal size. Type the first few letters of a firm name or enter a keyword to create an industry specific list. Learn about each M&A firm’s service offering and deal team. If it’s a good fit…choose the most appropriate contact and add their business card to your list. Further identify industry experts by keyword searching professional biographies. Once your research is done, return to Manage Lists to download your contacts with full business card information. Private Equity Info accelerates M&A research. Expand your network. Close more deals.

Previously, I wrote about the median age of private equity portfolio companies upon exit. I also showed the spread in holding periods for these exited portfolio companies. In this study, I investigate the age distribution of currently held U.S. portfolio companies.

Introduction

Most of my career has been with PepsiCo where I was blessed to have been given the fortune to be a Division President twice. After which, I’ve been in the private equity space for 17 years. The dance card today is very interesting, colorful and rewarding. I’m an Operating Partner with Falconhead Capital, a small mid-market private equity firm in New York. I sit on four boards and I’ve got my coaching practice which goes under the heading of Faster Landings. At Faster Landings, we do two things – we coach senior executives in transition, and we also coach senior executives who are trying to land board seats.

When a company sells to a PE firm and the owner and/or C-suite is asked to stay on, how does the landscape change for these leaders?

The landscape changes for virtually everybody in the company. It begins with the timeline, which significantly shortens. Tomorrow now means this afternoon. Next year now means next week. Keep in mind, private equity executives are driven by three measures: internal rate of return, cash-on-cash return and hold period where less is more. Two of these measures are essentially time driven, hence the incredible immediacy to everything.

Are private equity firms loyal to the same law firm through multiple portfolio company transactions? I probed our database of private equity transactions to find out…

The quick answer is, it depends.

While some investment banks specialize in certain industry niches, most middle market boutique investment banking firms are industry agnostic. There’s a practical reason for this.

Private equity firms try to develop and maintain good business relationships with the various investment banks because the I-banks drive potential deal flow to the PE firms. It’s a symbiotic relationship.

When private equity firms exit their portfolio companies, some act as their own M&A advisor (private equity executives often have prior investment banking experience), but many PE firms hire investment bankers to represent them in the sale of their portfolio companies.

Which Investment Banks Do They Engage?

A customer asked a question about our portfolio company data. While I was looking at the data, I wondered if there was any seasonality to private equity acquisitions. The quick answer is, not much.