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June 23, 2017 No Comments Author: Andy Jones

U.S. Private Equity – Reaching Further Geographically

U.S. private equity firms, on average, acquire approximately 75% of their portfolio companies outside their home state (up from 64% in 2010).

Reviewing historical data from our Research Database, there appears to be a gradual trend of PE firms increasingly investing further from home. I would speculate this correlates to an increase in fund sizes, permitting the financial buyers to acquire larger portfolio companies, thus justifying a larger geographic reach.

Private Equity Investing Inside/Outside Their Home State

June 22, 2017 2 Comments Author: Andy Jones

Private Equity Firms: Cross-Border Investments

As an industry average, private equity firms tend to hold approximately 25% of their portfolio companies outside their home country (and 75% domestic). This 25-75% mix of domestic vs. cross-border investing seems to hold fairly constant over time.

(Note: this study refers to the actual number of portfolio companies, not the enterprise values)

Global Private Equity Firms - Domestic vs. Cross-Border Investments

www.PrivateEquityInfo.com

June 20, 2017 No Comments Author: Andy Jones

Interview – Ben Wallace with Azalea Capital

I recently spoke to Ben Wallace of Azalea Capital. With some minor edits, the transcription below captures our conversation surrounding private equity and deal sourcing (italics text are Ben’s words).

Ben Wallace - Azalea Capital

Ben Wallace – Azalea Capital

Which deal channels are you closing?

Historically, most of the transactions we’ve closed are with companies we pursued directly or where an advisor has made a limited number of qualified introductions. The number of advisors covering the lower middle market has certainly increased over the last 10 years or so, but we continue to see value in having both a direct outreach to companies in select industries as well as maintaining an active relationship with the advisors covering our target market.

Is valuation a factor at play here?

June 02, 2017 No Comments Author: Andy Jones

Private Equity Fund Size Distribution – Form D, Part 2

In a previous post, I looked at capital raises from 88,000 Form D filings from 2014 – 2016.

For this post, I mapped the distribution of fund sizes in 2016 from Form D filings (ignoring funds less than $5 million).

Form D Fund Distribution, Private Equity

Although the fund size distribution is somewhat flatter than expected, there’s a definite concentration in the $100 – $250 million range and a steep drop off for funds with $1 billion or more. This is consistent with the private equity fund sizes we see in our database at www.PrivateEquityInfo.com (we don’t use Form D data in our database).

The next chart shows how this has changed over time, comparing the same 2016 data to 2015 and 2014.

May 31, 2017 2 Comments Author: Andy Jones

Private Equity Fund Raising – Form D Filings Study

Private equity activity has increased dramatically since the launch of our Research Database in 2005, especially in the middle market – more firms, substantially more capital.

Besides our own internal database, year-to-year changes in Form D filings provide another indicator for private equity capital raising activity.

Using data from 88,000 Form D filings over the past three years, I compared the capital raising trends for private equity funds, hedge funds and venture capital funds.

Here’s what I found…

May 19, 2017 No Comments Author: Andy Jones

Top Private Equity Investors in Public Companies (Part 2)

I previously discussed creating a portfolio of 560 publicly-traded stocks based on private equity ownership in each company (the PE-basket). While the last post focused on the overall performance of the PE-basket relative to benchmarks, I thought it would be insightful to look at individual company gains and losses within this basket.

While the average return for the PE-basket was 4.0% over a five-month period, 41 of these companies returned greater than 50%, 11 companies topped 100% and three companies exceeded 200%!

The Top Performers (with 100%+ Returns)

May 12, 2017 No Comments Author: Andy Jones

Private Equity – Investing in Public Companies

Although private equity firms normally invest in privately held companies, on occasion, some firms will invest in publicly traded companies… or will retain shares in portfolio companies that are now publicly traded.

A quick study of the www.PrivateEquityInfo.com database in late November showed 306 private equity firms collectively held 560 publicly traded-companies in their portfolios.

From these 560 publicly-traded companies, I created an equally-weighted basket of stocks (PE-basket) to track through time. Now that several months have passed, let’s check the performance (thus far) of this PE-basket relative to several benchmark ETFs.