Private equity platform investments in technology companies increased significantly in 2020YTD as a percentage of all PE deals. This is likely an influence of Covid-19, as private equity firms continued to close new investments in technology companies compared to the collective “pause” the PE firms placed on other industries.

Private equity investments in the healthcare sector, as a percentage of total PE platform transactions, have effectively doubled over the last 20 years.

Historically, manufacturing was the predominant industry of interest for private equity acquisitions. However, as PE firms increasingly looked for more scalable companies with lower CapEx requirements, over time, manufacturing acquisitions declined as a percentage of the total private equity investments.

The median holding period for private equity portfolio companies is currently 4.8 years, as reported in our recently updated portfolio company holding periods study.

Given this, it is reasonable to assume that portfolio companies held five years or longer might be good candidates/prospects for an exit.

Our M&A Research Database currently shows 218 portfolio companies that will reach the 5-year holding period milestone in the month of June, 2020. A few sample companies are presented below.

I periodically update the private equity portfolio company holding periods to track this trend over time. I thought this would be a good time to append another data point to the graph, just before this metric is impacted by the COVID-19 economy.

2020 YTD Median Holding Period = 4.8 years

In a previous data study titled “Smart, Contrarian Private Equity Firms”, I wrote about private equity firms with prescient timing during the last recession… those that exited at the peak, just before the last recession, and those PE firms that acquired new portfolio companies at the lower valuations of 2009-2010.

Today, we’ll look at private equity firms that exited portfolio companies in January and February (and a few in the first part of March) of 2020, just prior to the onslaught of the Coronavirus. Here are those firms:

Companies offering telehealth and telemedicine services not only have the ability to help in a crisis, they will likely experience significant increased demand from the recent CoronaVirus outbreak. Our M&A Research Database currently tracks 25 private equity-backed portfolio companies offering telehealth services. Sample acquisitions below…

Data centric companies have become one of the most favored sectors for private equity investors in recent years. This trend started gaining momentum in 2011. Although private equity began exploring data analytics companies as an investment thesis in 2007 and 2008, the recession of 2009 – 2010 halted most PE investments across all sectors during this time.

The increased focus on data analytics companies is largely fueled by the adoption of predictive analytics (initially), and subsequently by machine learning and the rise in artificial intelligence. These applications require data (preferably good data) as the atomic input unit from which to learn. Input data informs machine learning much the same way our five senses input data into our brain, from which we derive patterns and develop predictive skills.

Data-as-a-product resonates with private equity investment preferences precisely because it is scalable, potentially quite profitable and not capital intensive (relative to scalability).

Private equity firms have made a number of investments in companies offering physical therapy services, including: general rehabilitation services, occupational therapy, sports injury recovery, orthopedic rehabilitation and pediatric therapy. Our Private Equity Database currently tracks 43 U.S. based physical therapy companies held by private equity firms.

The security industry overall has attracted significant attention from private equity investors in recent years. Private equity investments into security-related companies ranges from cybersecurity, home security, national security, private security, to security screening of goods crossing borders.

Our private equity database currently tracks 719 current platform portfolio companies with some element of security to their product or service offering. 73 of these investments were made in the last 12 months alone.