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Back to blog August 26, 2019 No Comments Author: Andy Jones

Number of Portfolio Companies per PE Firm

In my previous blog about the growth of the private equity industry, I made a note to follow-up with a study of the number of portfolio companies held by private equity firms as a function of the PE firm size. This is that study.

Collectively, the private equity firms in our research database hold a median of 7 current portfolio companies (the average is 11.3). By “current”, I mean NOT a prior investment.

NOTE – the average is higher than the median because the outliers (those PE firms that hold significantly more portfolio companies) pull up the average considerably, as we will see further below.

To understand how the number of portfolio companies varies by PE firm size, the private equity firms are grouped into four broad size categories based on the typical deal size the PE firm seeks for platform investments:

Private Equity Firms size categories

As previously mentioned, the larger PE firms typically hold a greater number of portfolio companies compared to the smaller PE firms. Here’s the supporting data:

Private Equity portfolio companies holdings by PE firm size

The average is still higher than the median even within each of these size categories, implying some firms hold significantly more portfolio companies than the median firm for that category. That is, there are outliers on the upside. These outliers can be seen in the visual representation of the raw data in the chart below.

PortCos by PE firm size

 

Note – the width of the colored sections represents the # of PE firms that hold that # of current portfolio companies. For example, there are 87 “Small” private equity firms that hold the median of 5 current portfolio companies. The width of the orange section is therefore 87 pixels at that point.

From this chart, we can see:

  1. PE firms holding more than 50 current portfolio companies are really the outliers across the overall private equity landscape. These are the firms that pull up the average within each size category.
  2. As we move up in category size, the shaded areas transition in shape from wide with lower portfolio counts to thinner with greater portfolio counts. The “Small” PE firms hold just a few portfolio companies (fewer than 5 to be exact) and only show 2 notable exceptions as outliers while the “Mega” firms are spread more across the range of portfolio counts, with 24 firms holding more than 50 portfolio companies.

Bottom Line

If someone asks,

“How many portfolio companies does a typical private equity firm hold at any given time?”.

Answer: “Typically between 5 and 14, but it varies considerably.”