Portfolio company aging stats are dictated by past acquisition activity and exit rates over time.
As portfolio companies grow older in their respective funds, they age out, via an exit, often within 3 – 7 years. Portfolio companies in the 5 – 7 year vintage signal potential near-term transactions – deal flow – the lifeblood of investment banks, private equity firms, accountants, law firms, and a host of M&A service providers.
For U.S. portfolio companies owned by U.S.-based private equity firms, there are currently:
1,225 portfolio companies currently aged (5 – 5.9 years)
997 portfolio companies currently aged (6 – 6.9 years)
776 portfolio companies currently aged (7 – 7.9 years)
If we stand on the 5-year mark and look upstream at the parade of portfolio companies approaching their five-year anniversary in their respective funds, we’ll see the monthly aging flow shown in the graph below.
We reviewed all private equity platform investments in 2021 and ranked them by industry. The following Top 10 industries represent nearly half of all private equity platform acquisitions in 2021:
TOP 10 INDUSTRIES
Food & Beverage
The chart below shows each of these industries as a percentage of the total PE platform acquisitions in 2021. Clearly, Software was the major industry of interest for private equity in 2021, representing17% of all platform acquisitions.
The trending private equity investment sectors for November 2021 werePharma – Contract Research, Cloud Native Software and Enterprise Resource Planning Software. Overall, software acquisitions overwhelmingly represent the top industry of interest for private equity firms.
Sample transactions for each category are highlighted below.