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December 08, 2017 2 Comments Author: Andy Jones

Private Equity Investments in Public Companies (Part 3)

A year ago, I created a portfolio of 655 publicly-traded stocks based on private equity ownership in each company. I called it the “PE-basket”.

When I checked the performance of this PE-basket at the 6-month mark, it was lagging the performance of the general market. However, now that a full year has passed, the PE-basket has in fact out-performed the broad market as well as the other benchmarks I selected.

Publicly traded PE-owned portfolio companies

November 13, 2017 No Comments Author: Andy Jones

Private Equity Fund Concentrations

A study of our private equity fund data shows the bulk of the $1.8 trillion in private equity assets are concentrated within a small number of PE firms.

  • The largest 1% of funds represent 22% of the total private equity assets under management (AuM). Further, these top 1% of funds are operated by only 34 unique private equity firms.
  • The top 5% of funds (122 unique PE firms) control nearly half of all private-equity-managed assets.

Although the mega funds control a disproportionate percentage of the total AuM, there is a long tail to the distribution of assets on the lower end of the market.

So while the top 50% of funds control 96% of all private equity assets, the remaining 4% of assets is still $75 billion dollars. This is a sizable amount of capital deployed to mid-market companies by 3,200 funds.

Consequently, if your firm offers sell-side advisory services, and you think your client’s company might be too small to attract the attention of the private equity universe because they have traditionally looked at much larger deals, this may no longer be the case.

Private Equity Fund Concentrations

November 09, 2017 No Comments Author: Andy Jones

Private Equity Fund Size – by Assets Under Management

In a previous blog, I showed the distribution of private equity funds by the amount of capital raised. This study shows the distribution of private equity funds by assets under management (AuM).

The 6,472 private equity buyout funds included in this study account for a staggering $1.8 trillion.

The distribution of fund AuM tends to center around $100 – $250 million, with a median fund size of $65 million.

Private Equity Fund Size Distribution by Assets under Management

October 17, 2017 5 Comments Author: Andy Jones

Private Equity Investment Trends in Manufacturing

I ran some analytics on our private equity portfolio company data to view changes in how PE firms invest in various industries over time. The graph below shows the historical investment trend for manufacturing portfolio companies by year.

Investments in manufacturing companies, as a share of the overall private equity investment pool, has decreased, but seems to have settled around 15 – 17%.

Private Equity Investment Trend: Manufacturing

October 04, 2017 No Comments Author: Andy Jones

Private Equity Holding Periods – Histogram (updated)

I previously discussed the trend in median holding periods for private equity-owned portfolio companies. However, there is a significant standard deviation in the data.

The histogram below shows the distribution of holding periods for portfolio company exits in 2017 YTD.Private Equity holding periods - histogram

While the data looks much like a normal distribution for holdings periods 0 – 8 years, there’s an unusual bump up in years 8 – 10. Read my previous explanation about this effect related to the recession of 2008 – 2010.

Also, a large portion of the longest held investments (12+ years), were European private equity firms holding European portfolio companies. Cultural difference.

September 27, 2017 No Comments Author: Andy Jones

Private Equity Holding Periods Trending Down

Holding periods for PE-owned portfolio companies correlate with macro-economic events – lengthening during recessionary periods and shortening during growth & recovery years.

The most recent data from shows median portfolio holding periods continue their slight downward trend as private equity firms capitalize on higher valuations.

Private Equity Holding Periods

  • Current = 5.0 years, (2017 YTD)
  • Peak = 5.7 years, (2014)
  • Low = 3.0 years, (early 2000’s dot com boom… although it went down to 3.5 years in 2008 as well)