As we have discussed in previous articles, private equity firms are sitting on a cash pile of over $800 billion, according to Preqin, the alternative assets industry’s leading source of data and intelligence. Now comes even more interesting news from PitchBook, a leading M&A research firm: “A plurality of that is concentrated in funds of the 2015 vintage, with the majority (55%) in funds closed over the past two years.”
You can see this visually in the following chart:
Source: PitchBook - Note: Funds return data includes 2016 numbers from vehicles that have begun reporting but have not fully closed.
The implications of this data are clear to M&A professionals and researchers. This is how PitchBook describes the situation:
With such proportions, it’s clear that PE investors have more than enough capital to fuel typical investment cycles for some time. For the midterm, the heft of capital in 2012-2013 vintages will continue to contribute to the upward pressure on valuations for worthwhile targets currently in the market. With such a hoard of youthful dry powder, many PE funds are prepared for the onset of the next investment cycle.
As many of you are aware, we have been in the midst of a “seller’s market” for the last 2-3 years, with PE firms being very aggressive during that time frame. Even though data may suggest that the M&A market has softened a bit after a record 2015 (although not in the lower middle-market based on our deal activity) with the significant percentage of committed capital available to firms (55% of $800 billion), we expect the next 18-24 months to continue to be a prime time to find a buyer/investor for your business. This is especially the case for companies with revenue below $100 million. The ability to finance these “smaller” transactions is greatly enhanced when compared to the trials in obtaining lending for much larger deals.
If you would like to learn more about committed capital and what it means for middle-market business owners, contact us and set aside some time to meet with us at our next exit planning seminar. Not only will you have access to some leading research on buyer activity right now, you will also have the opportunity to meet with our team while there and confidentially discuss your particular situation and needs.
Reach out to us at 972-232-1121 or send me an email at [email protected] and I will put you in touch with one of our team members that can answer any questions you might have.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2021 Generational Equity, LLC. All Rights Reserved.
The information we learn from customers helps us personalize and continually improve your experience. Here are the types of information we gather.
We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice.
DealForce, LLC’s affiliates are all part of one corporate family, they work with one another and may work together to provide services to you. The sharing of your information among affiliates enables DealForce to serve you more efficiently and makes it more convenient for you to do business with Generational Group. DealForce is permitted by law to share information with its affiliates. All of our affiliates follow similar privacy policies.
For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Group may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Group. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Group at its office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Group may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Group does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Group will be deemed NOT to be confidential. By sending Generational Group any information or material, you grant Generational Group an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Group is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Our computer system protects personal information using advanced firewall technology.
Information Generational Group publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Group intends to announce such products, programs or services in your country. Consult a Generational Group representative for information regarding the products, programs and services which may be available to you.
Generational Group makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Group web site, please understand that it is independent from Generational Group, and that Generational Group has no control over the content on that web site. In addition, a link to a non-Generational Group web site does not mean that Generational Group endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, Trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Group BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Group.