Private Equity Portfolio Trends – Software & SaaS
I previously wrote about the trend of declining private equity investments in manufacturing and the subsequent increase in investments in Healthcare & Pharma and Technology companies, (as a percentage of the total number of platform portfolio companies acquired). To conclude this series that explains the shift in investment focus from manufacturing to other sectors, the graphs below also show a significant increase in private equity investments in Software and Software as a Service (SaaS) companies.
As a percentage of the total platform investments made by private equity firms, software has doubled, from ~5% of deals to nearly 10%.
Private Equity acquisitions of SaaS companies has increased from non-existent (no one really talked about SaaS before 2006) to 2.5% of all private equity portfolio acquisitions in 2018. Monthly recurring revenue bodes well for quality of earnings, a key metric for private equity acquirers.
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