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July 02, 2019 2 Comments Author: Andy Jones

Private Equity Investing in Logistics Companies

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.

June 20, 2019 No Comments Author: Andy Jones

Private Equity Firm Size

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.

May 03, 2019 No Comments Author: Andy Jones

Private Equity Investing in Cyber Security Companies

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.

Private Equity Investments in Cyber Security Companies

April 25, 2019 No Comments Author: Andy Jones

Private Equity Investing in Software as a Service (SaaS) Companies

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.

Private Equity Acquisitions of SaaS Companies by year

April 09, 2019 No Comments Author: Andy Jones

Investment Banks Firm Size

While we often think about investment banks being large-scale entities, the truth is, most investment banks are quite small.

Pulling the number of deal makers per firm from our M&A Research database at Private Equity Info, I found the median investment bank has only four deal makers. Said another way, half of the investment banking firms have 4 or fewer deal makers.

Further, 90% of the investment banks have 12 or fewer deal makers.

The histogram below shows the breakdown.

Investment Banks Deal Makers per Firm

 

March 08, 2019 No Comments Author: Andy Jones

Private Equity – Acquisition Criteria Metrics

We have previously reported that private equity, as an industry, is moving down market, increasingly investing in smaller deals. The question is, what company size ranges attract PE firms? In other words, how small, how big and are there any sweet spots in terms of preferred portfolio company size for new platform acquisitions?

The Data

Compiling data from www.PrivateEquityInfo.com, the charts below show the platform acquisition criteria metrics for the private equity firms in our database.

To simplify, each chart shows the minimum requirements for each metric (for example, minimum revenue, min EBITDA, etc.). We also have data on the maximum range for each metric, but I will group those together for a later study. In other words, this study is about the minimum deal size requirements for private equity firms.

To be clear, this data is not based on transaction comps, but on the stated, desired range for platform acquisitions. (Note: we only record the size preferences for platform investments because there are often no minimums for add-on investments).

Minimum Revenue

  • 60% of PE firms will look at deals with revenue less than $10 million.
  • 88% of PE firms will look at deals with revenue less than $25 million.

Private Equity Acquisition Criteria - Min Revenue

February 28, 2019 No Comments Author: Andy Jones

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 Investment Trends in Software Companies

February 25, 2019 No Comments Author: Andy Jones

Private Equity Portfolio Trends – Technology

I previously wrote about the trend of declining private equity investments in manufacturing and increasing investments in Healthcare & Pharma companies, (as a percentage of the total number of platform portfolio companies acquired). As a continuation of this analysis, the chart below shows a similar upward trend for private equity investments in Technology companies… now equal to the level we saw in 2000, at the peak of the first dot.com bubble.

Private Equity Investment Trends in Technology Companies

Want to see a similar trend line for a particular industry? Email me to discuss custom research options (ajones@privateequityinfo.com).