Quality Deal Flow from Aged Portfolio Companies

Access to quality deal flow is the single largest determinant of success for investment banks and private equity firms. There is, however, a steady flow of potential deal intelligence that remains largely untapped.

POTENTIAL DEAL FLOW

The statistics from our private equity database show the median holding period for private equity portfolio companies is 4.8 years. That is, half of all portfolio companies are exited BEFORE they age 4.8 years under private equity ownership.

Private equity owned portfolio companies crossing the 4-year threshold are therefore strong candidates for a transaction, in that they have a reasonably high probability of a near-term exit. This is a potential source of quality deal flow, M&A intelligence and transaction ideas, especially if some of these properly aged portfolio companies fit together.

THE DATA

The PEI M&A Research Database is currently tracking 246 private equity backed portfolio companies (globally) that are crossing the 4-year age mark this month (September 2020). 131 of these portfolio companies are U.S. based.