Private equity Intelligent Network finds 70% of PE activity was focused on value creation initiatives during the first quarter of 2021
NASHVILLE — BluWave, a private equity-focused Intelligent Network, today released new data on how private equity funds and their portfolio companies are allocating resources as the economy turns a corner. The results of the report demonstrate that during Q1 2021 the majority of company leaders prioritized investing in growth and people-oriented specialized groups that could accelerate performance during the economic recovery underway. Value creation activities have increased from 56 percent in Q4 2020 to 70 percent in Q1 2021.
“While the economy seems to be moving in a positive, steady direction, not all companies are recovering at the same rate,” says BluWave founder and CEO, Sean Mooney. “We are seeing the private equity industry making investments to ensure the rising tide is lifting all boats.”
BluWave’s proprietary insights report includes data from thousands of projects initiated by the PE industry. Key findings include:
- HR and talent remain private equity’s top area of focus, accounting for nearly 39% of all due diligence and value creation initiatives by PE in Q1 2021. Activity levels in HR and talent continue to grow over time, comparatively accounting for 32% of projects in Q1 2020 and 25% of projects in Q1 2019. Within this category, we are seeing significant investments by PE in ESG and Diversity, Equity, and Inclusion (DE&I) initiatives.
- Market strategy advisory was PE’s top activity in due diligence during Q1 2021, accounting for nearly 38% of projects. This compares to 24% of activity in Q4 2020. Market strategy advisory is a common, time-tested practice in the PE industry, leveraging insights to inform growth opportunities for new investments. This shift in Q1 2021 signals significant and growing investment activity by private equity across the U.S. and global economies.
- HR and talent accounted for nearly 45% of PE value creation activities during Q1 2021. This compares to 40% in Q1 2020 and 30% in Q1 2019. The PE industry is taking broad action to bring in people with the right skills to grow and develop companies as Covid begins to recede in the U.S. and a new normal is emerging. BluWave is also seeing strong ongoing investments in operations, sales and marketing, and technology capabilities for portfolio companies.
Adds Katie Marchetti, managing director of BluWave: “We anticipate continued strong investments in value creation in 2021 and are seeing a surge of new investment activities underway as a significant number of business owners seek capital from the private equity industry.”