Private Equity Investment Trends in Manufacturing
I ran some analytics on our private equity portfolio company data to view changes in how PE firms invest in various industries over time. The graph below shows the historical investment trend for manufacturing portfolio companies by year.
Investments in manufacturing companies, as a share of the overall private equity investment pool, has decreased, but seems to have settled around 15 – 17%.
While the absolute number of PE investments in Manufacturing has increased over time, this is largely because the private equity industry has grown considerably in recent years (more investors & larger funds). To isolate changes within a specific industry from the growth of the private equity industry as a whole, I looked at investments within an industry as a percentage of the total number of private equity portfolio company investments for each year.
Macro-economic cycles clearly effect the PE firms’ relative interest in the manufacturing sector compared to other industries. During the boom years, private equity firms invested less (as a percentage) in manufacturing companies, presumably to invest more heavily in technology and other faster-growing sectors. Conversely, during recessionary periods, there’s an uptick in manufacturing investments again.
I plan to look at other industries in the future. If you have a specific industry of interest for this type of analysis, send me an email with your request and I’ll add it to the list.