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

The trending private equity investment sectors for September 2020 are highlighted below with a few example transactions.

Before the era of personal computers, companies used “Mainframes” for large centralized computing. In the 1970s and ’80s, individual users could access the Mainframe from the terminal on their desk. The rise of the personal computer placed the computing power and storage on our desks. Hence, the term “desktop computer”.

In a sense, cloud computing is a return to the Mainframe style of computing. That is, accessing remote resources (servers, databases, digital storage capacity, software, etc.) over the internet through the terminal of our personal computers.

By sharing large pools of resources, cloud computing offers advantages of reduced cost, increased scalability, massive computing power, and greater reliability.

Cloud computing also enables flexibility with remote work practices, a common theme in 2020. This general transition to cloud computing coupled with the accelerated shift to remote work has created a surge in the already-growing, global cloud computing industry.

While there are many private equity investments in companies that offer cloud-based, SaaS solutions, surprisingly, we do not see many recent private equity investments in the pure cloud computing space.

The trending private equity investment sectors for August 2020 are highlighted below with a few example transactions.

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.

In recent years, many basic healthcare interactions have been moving to virtual health services – telehealth or remote video health services. The spread of the coronavirus has accelerated the trend.

Private equity firms early to invest in telehealth portfolio companies have benefited from the sudden and significant increased demand for telemedicine and related remote healthcare services.

Which private equity firms capitalized on this shift in momentum with more than one portfolio company in the virtual health space?

The PEI M&A Research Database shows 481 private equity platform transactions in medical device companies:

• 185 current investments, collectively owned by 127 unique private equity firms
• 296 prior (exited) investments.

Of the 185 current investments in medical device companies, the most active private equity firms for platform investments are:

The trending private equity investment sectors for July 2020 are highlighted below with a few example transactions.

Private equity platform investments in Software-as-a-Service companies increased significantly in 2020YTD as a percentage of all PE deals. Many SaaS companies have been less negatively impacted by the economic impacts of the coronavirus compared to other industries, both in terms of continued demand for their product or service as well as the agility to continuing operations, working from home. In many cases, SaaS companies have benefitted by the sudden change in industry dynamics.

The trending private equity investment sectors for June 2020 are highlighted below with a few example transactions.