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Back to blog August 06, 2018 No Comments Author: Andy Jones

Top 10 Private Equity Industry Investment Themes for 2018 YTD

Reviewing platform acquisitions by private equity firms in the first half of 2018, we see the following ten industries as thematic. The top 2 industries, Manufacturing and Software, were equally represented and dominated the list with more than 2x the number of investments compared to #3 on the list (Technology).

1. Manufacturing

Within manufacturing, we see a wide range of end applications and industries served.

15 Random Examples:

  1. Agricultural nutrients & biostimulants
  2. Aluminum extrusion dies
  3. Brass fittings & valves
  4. Coatings & sealants
  5. Corrugated products, plastic thermoforming trays, and pressure-sensitive labels
  6. Diamond cutting tools
  7. Drilling and completion bits
  8. Elevator interiors
  9. Home furnishings
  10. Insulated overhead doors
  11. LED lighting fixtures
  12. Plastic and metal packaging
  13. Specialized polymers & packaging
  14. Test and measurement equipment
  15. Windows & drawers

2. Software

Within software, there was also a wide range of end applications with no clear sub-sector theme.

10 Random Examples:

  1. Advertising & sales intelligence
  2. Billing
  3. Compliance and document management
  4. Corporate treasury asset management
  5. Electronic health record and practice management
  6. Employee engagement software
  7. Medical staff scheduling
  8. Project management
  9. Social media analytics & monitoring
  10. Talent management

3. Technology

The technology sector saw a focus on Information Technology, particularly related to cloud computing, networking and fintech.

10 Random Examples:

  1. Building technology solutions
  2. Clinical protein electrophoresis equipment & reagents
  3. Cloud computing provider
  4. CRM solutions
  5. Data center, security, analytics, networking and mobility
  6. Fintech lender
  7. GPS technology
  8. Information technology and business consulting
  9. Mass spectrometry components
  10. Sales and marketing intelligence

4. Healthcare

With considerable investments in the Healthcare sector, many of the newly acquired portfolio companies were either software specifically for the healthcare market, consulting services or healthcare suppliers, but fewer actual healthcare providers.

10 Random Examples:

  1. Care advisory services for hospitals and physician practices
  2. Claims communications, payments and enrollment
  3. Clinical documentation, practice management, and billing solutions
  4. Data exchange, healthcare analytics
  5. Healthcare provider – orthopedics, plastic surgery & spine surgery
  6. Hospital staffing and management
  7. Medical workwear
  8. Outpatient radiology centers
  9. Regulatory compliance solutions
  10. Reproduction treatment

5. Data

The consistent application from these 2018 data company acquisitions is the use of data to make better decisions, including a number of companies using data to assess credit risk.

10 Random Examples:

  1. Big data analytics
  2. Credit data to automotive retail dealers
  3. Data-driven graphics solutions for live sports broadcasts
  4. Data exchange, healthcare analytics
  5. Data to help lenders assess borrower credit risk
  6. Fintech lender that uses data to model small business credit
  7. Healthcare data and analytics for diagnosing and treating complex diseases
  8. Media intelligence
  9. People data – contact, social, demographic & professional information lookup
  10. Telecom market data and insights

6. Oil & Gas

In recent years, we saw fewer private equity investments in the oil & gas sector with depressed oil prices. The investments we did see were more in oil & gas services companies. Thus far in 2018, there’s a mix between services and actual exploration and production companies being acquired by the PE firms. There also seems to be a specific interest in Midstream services.

10 Random Examples:

  1. Crude oil logistics – storage, blending and terminal solutions
  2. Independent oil and gas exploration and development
  3. Manufacturing and refurbishing tanks
  4. Midstream development – near-the-wellhead oil & gas infrastructure
  5. Midstream infrastructure to transport crude oil from the wellhead to market
  6. Midstream services – natural gas gathering, processing, compression and treating; crude oil and condensate gathering and stabilization; produced-water gathering and disposal; and product marketing
  7. Petroleum products storage
  8. Power solutions for oil & gas pipelines
  9. Production equipment and oilfield tubular goods
  10. Retail heating oil and propane supplier

7. Medical

Private equity investments in the medical space overall is growing, but the sub-sectors within Medical are quite diverse.

10 Random Examples:

  1. Eye care practice management
  2. Home-based medical care for chronically ill patients
  3. Managed care solutions – claims management utilization management, medical bill review
  4. Manufacturer of innovative gastro-intestinal endoscopy products
  5. Manufacturing of medical devices
  6. Medical device research
  7. Medical imaging and diagnostics services
  8. Medical products / implants distributor for orthopedic surgery
  9. Medical writing service
  10. Non-invasive medical devices for monitoring of chronic liver diseases

8. Construction

Traditionally, private equity firms do not invest in the construction sector. Over the years, when customers have called us to help identify private equity firms actively investing in construction companies, I knew it was going to be a difficult assignment. While construction-related companies do show up on this top 10 list, most of these companies are not builders nor general contractor. More likely, they are providing parts, tools and services to support the actual construction.

10 Random Examples:

  1. Asphalt milling services for roadways
  2. Construction and maintenance services to the utility and heavy industrial markets
  3. Construction services to grocery retailers
  4. Crane rental service
  5. General contractor specializing in construction and public works
  6. Ground stabilization services for construction and infrastructure projects
  7. Marine construction and material offloading services
  8. Prefabricate elements used in building construction
  9. Supplier of drainage and construction products
  10. Traffic safety services for road construction sites

9. Transportation & Logistics

Transportation made the top 10 list but partly for the logistics component.

10 Random Examples:

  1. Bulk freight shipping
  2. Customized transportation and logistics services
  3. Healthcare transportation services
  4. Private transportation service – taxi, shuttle, luxury and bus
  5. Secure transportation – cash / ATMs
  6. Specialty freight brokerage services
  7. Specialty ground transportation – airport and campus shuttle services
  8. Transport by land and short sea shipping
  9. Transportation service for special needs and homeless students
  10. Truckload transportation management

10. Engineering

Historically, private equity firms have not been big investors in traditional engineering companies, likely because it’s a professional service and may not scale as easily as sectors like Software. However, 2018 YTD shows a significant private equity interest in engineering companies.

10 Random Examples:

  1. Acoustical engineering
  2. Aviation engineering
  3. Climate engineering for industrial refrigeration
  4. Electric transmission and distribution engineering
  5. Gene engineering for cell therapies
  6. Home building engineering
  7. Multi-discipline professional engineering services
  8. Oilfield engineering
  9. Packaging engineering
  10. Telecom engineering