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November 12, 2020 No Comments Author: Andy Jones

Private Equity Portfolio Company Holding Periods – Updated

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

Private Equity Holding Periods

Min = 3.0 years (early 2000’s) and 3.5 years (2008)

October 06, 2020 No Comments Author: Andy Jones

Private Equity Investment in Cloud Computing

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.

March 29, 2019 No Comments Author: Andy Jones

Private Equity Investing in Healthy Living and Organic Foods

A member of our research team pointed out an investment trend she has noticed in recent years – private equity firms investing in businesses that cater to health-conscious individuals. This includes investments in healthy lifestyle brands, organic food companies and companies that generally market their products as “better-for-you”.

The best way to illustrate this is with a few examples in each category: