Smaller Private Equity Firms as a Deal Flow Channel
Two instances where a company might have had more than one private equity owner:
- A private equity firm sells a portfolio company to another (often larger) private equity firm.
- Private equity firms collaborate to purchase a company together as co-owners.
Because of this, some companies have been owned by multiple private equity firms (either simultaneously or in succession). This is not uncommon. In fact,
Normally, companies find their way to a strategic exit or IPO long before they have 5+ different private equity owners. However…
242 companies in our private equity database have had 5 or more private equity owners.
4 companies have had more than 10 different private equity owners, as difficult as that is to imagine. These firms include:
- Asurion (Nashville, TN) – a provider of value-added subscriber services to the wireless industry and provides wireless device protection.
- MetroPCS (Dallas, TX) – provides affordable wireless communications services.
- MultiPlan (New York, NY) – provides end-to-end healthcare cost management solutions that help control the financial risks associated with medical bills while helping providers more effectively control reimbursements.
- Grupo Corporativo ONO (Madrid, Spain) – provides telecommunications, cable television and broadband Internet services to residential and business customers.
These companies have kept the water cooler conversations humming.
While most private equity firms prefer to find investment opportunities directly from industry, there’s clearly a strategy of larger PE firms buying portfolio companies from smaller PE firms, as the companies have already started the process of institutionalizing their operations and have graduated into larger entities. In this sense, smaller PE firms may be viewed as a deal flow channel for larger PE investors.
www.PrivateEquityInfo.com is a great resource for private equity firms to develop this channel, for both platform and add-on acquisitions.