What slowdown in PE activity? Aggressive Fed rate hikes in 2022 and 2023 may have dampened enthusiasm for the larger PE leveraged buyout deals, but many other areas of private equity continue to experience robust activity.
As discussed in this The Wall Street Journal article, smaller technology deals continue to see a lot of attention from private equity buyers.
When we hear about private equity in the news, in most cases, the story is about one of the larger, buyout shops. However, there are literally thousands of smaller private equity funds active in the US today.
Many of these firms have smaller capital bases (less than $1B) and often focus their investment activities in the middle and lower-middle market space.
As alluded to in this article, there are still plenty of deals getting done in that middle/lower-middle market space. Many of these deals are for smaller companies, that are being added-on to larger private equity platform companies.
A good portion of these deals are done with equity only — no debt. Therefore, while interest rates will always be a concern, the recent rates hikes by the Fed are less of a factor.
At E78 Partners, we continue to experience a lot of buy-and-build and add-on activity within our PE client base. We were created to help private equity funds integrate and professionalize the finance and tech aspects of these platform companies.
If you are a PE Sponsor active in this market with add-ons, give us a call. We can help you get these transactions off to a good start, and begin to drive value creation right away.
© Copyright June 2023. Marc Patterson. All Rights Reserved.