In 2018, we looked at the historical ratio of investments-to-exits for private equity portfolio companies. Generally, the data showed a trend of private equity firms pushing down market, focusing on smaller transactions. This down market trend was thematic from 2015 – 2018, and is now well-known within the M&A industry.

Today, we repeat this study with updated data from 2017 – 2022YTD. We now see a reversal of the previous trend. That is, the ratio of the number of PE (Investments / Exits) shows private equity firms now moving up market to focus on Large and Mega deals.

The Data

All data for this study pulls from our M&A research database at www.PrivateEquityInfo.com.

While the most prolific PE investment sectors for October 2022 were Manufacturing and Software, we wanted to highlight some more specialized sectors this month as well.

The trending (more specialized) private equity investment sectors for October 2022 were Energy Services, Healthcare Services, Pharma – Contract Research Organization, and Food Manufacturing.

Sample transactions for each category are highlighted below.

The trending private equity investment sectors for September 2022 were Manufacturing – Electrical & Electronics, Healthcare – Therapy, and Software – Sales Systems.

Sample transactions for each category are highlighted below.

The trending private equity investment sectors for the first half of 2022 are shown in the chart below, which ranks industries as a percentage of the total PE platform acquisitions in Q1 & Q2 of 2022.

Software represents 13% of all private equity platform acquisitions from our mid-year review.

Our partners at TruSight, LLC wrote an interesting article about the recent and substantial decline in new automotive sales. TruSight’s thesis is that this would likely create additional demand for aftermarket parts.

To pair with that, we explored our Database of Private Equity Firms to analyze the trend of private equity firms investing in Automotive Aftermarket platform acquisitions.

The chart below shows varied PE appetite for automotive aftermarket companies over the past decade.

While the most prolific PE investment sectors for August 2022 were Manufacturing, Healthcare, and Software, we wanted to highlight some more specialized sectors this month as well.

The trending (more specialized) private equity investment sectors for August 2022 were Advisory Platforms, Pharma-Contract Research, Artificial Intelligence, Data Analytics and Fintech.

Sample transactions for each category are highlighted below.

Private equity firms have shown an increased interest in Advisory Services platforms over the past decade. Consistent with this trend, 2022 is on pace for a record year for PE firms investing in advisory services companies.

Our M&A Research Database shows 194 historical platform investments (excluding add-ons) in the Advisory Services space.

There was a time when private equity firms generally avoided acquiring portfolio companies from other private equity firms. This is no longer the case.

In fact, some PE firms operating at the lower end of the market view larger PE firms as likely exit strategies for their portfolio companies. Conversely, larger PE firms now view smaller PE investors as potential deal flow channels for new acquisitions.

The graph below shows the number of PE-to-PE deals by month, since Jan 2021.

The data table below compares monthly private equity transaction volume (investments and exits of portfolio company holdings) for the first half of 2021 and 2022.

Each month, we review and comment on private equity Investment trends. This post, we review industry themes from private equity portfolio Exits (July 2022).

Industries with the most exits in July (# exits)

• Manufacturing (14)
• Software (11)

See sample transactions for each below…