I thought it would be interesting to look at the trends in private equity platform acquisitions year-by-year, since 2000. The graphs below represent 47,394 private equity platform acquisitions over the last 21 years.
We can clearly see the dip in new acquisitions during the dot.com bust (2001 – 2003), the last recession (2009), the skittishness of 2019 (Q4 mostly), and the pandemic of 2020.
While private equity firms acquired considerably fewer companies in 2020, PE investments in healthcare, as a percentage of total PE platform acquisitions, increased significantly in 2020, now pushing 9% of total PE platform acquisitions.
We last updated the median private equity portfolio company holding period in May 2020 because I wanted to mark this metric (mostly) before the effects of COVID. In May, the median holding period was 4.8 years, the lowest since 2014.
I revisited the holding period study again this month (November) to measure any changes since May. It ticked up, but only slightly, to 4.9 years.
At first glance, this may seem surprising that COVID-effects are not more profoundly seen in the data. But there’s a good reason for this. There haven’t been that many exits to move the needle on this metric. Private equity portfolio exits are down considerably compared to recent years.
With private equity firms holding portfolio companies through the COVID uncertainty, we will almost certainly see an increase in the median holding period going forward.
2020 YTD Median Holding Period = 4.9 years
Min = 3.0 years (early 2000’s) and 3.5 years (2008)