Q4 2022 BluWave Insights

Every quarter our team analyzes the projects we work on with our 500+ PE firm clients to get a birdseye view of the market. We recently compiled our Q4 findings, as well as annual 2022 findings, into our Q4 2022 BluWave Insights Report. Request your copy.

Key findings from 2022 include:

  • Annual value creation activity increased ~14% YoY.
  • Human capital remains PE’s primary area of focus at 50% of all 2022 value creation activity.
  • Strategy resource usage in 2022 diligence activity increased from 43% in 2021 to 46% in 2022.

Learn more about the insights we gleaned from Q4 and 2022:

Learn more about how we can support your value creation, human capital, and strategic diligence efforts.

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Video transcript:

BluWave serves a trusted role with more than 500 of the world’s leading private equity firms and thousands of proactive businesses by connecting them with the best-in-class third parties to help build value with speed and certainty. With the conclusion of 2022 and the inception of the new year, we’ve gathered insights from our unique vantage in the private equity landscape. From our proprietary data, we are able to glean insights into how and why the best business builders in the world are assessing opportunities and building value in their portfolio companies. Here are some of the top takeaways from the BluWave Activity Index from Q1-Q4 2022.

The common theme throughout the entirety of 2022 is that business builders were focused on creating value in their companies. In the BluWave Value Creation Index, activity related to value creation was up to 72% by year-end – a more than 14% increase from 2021. Furthermore, Human Capital is surging to historically high numbers. The BluWave Activity Index shows that 50% of all value creation activity was invested in human capital for the year, and 54% in Q4.

On the due diligence side, deal flow was down in 2022. The BluWave Value Creation Index shows private equity activity related to diligence was down to 28% for the year. Within the diligence activity that we did see, we saw firms focus heavily on strategy initiatives – accounting for 46% of all diligence activity, up from 43% in 2021. In 2022, PE firms perceived the cost of misreading the market to be high in an uncertain economy, so they brought in strategic resources to help.

BluWave is pleased to work with some of the best business builders in the world every year. We hope the insights from our 2022 BluWave Insights Report will help you close deals with certainty, create differential value in your companies, and prepare for a confident exit. If you’d like to learn more and get the full report, please contact any member of the BluWave team or follow the link below.

Q3 2022 BluWave Insights

Every quarter our team analyzes the projects we work on with our 500+ PE firm clients to get a birdseye view of the market. We recently compiled our Q3 findings into our Q3 2022 BluWave Insights Report. Request your copy.

Key findings from Q3 ’22 include:

  • Value creation activity has increased 11% YoY.
  • Human capital remains PE’s primary area of focus at 36% of all Q3 activity.
  • Technology activity has changed 86% YoY.
  • Sales & marketing activity has changed 29% YoY.

Learn more about the insights we gleaned from Q3:

We can support your value creation needs, human capital needs, technology needs, sales & marketing needs, and more.


Video transcript:

BluWave serves a trusted role with more than 500 of the world’s leading private equity firms and thousands of proactive businesses by connecting them with the best-in-class third parties to help build value with speed and certainty. From our unique vantage in the private equity landscape, we’re able to glean insights into how and why the best business builders in the world are assessing opportunities and building value in their portfolio companies. Here are some of the top takeaways from the BluWave Activity Index during Q3 2022.

First and foremost, value creation remains key in private equity. Despite the unsteady economic landscape, PE firms are equipping their portfolio companies with resources to maintain the momentum of previous value creation efforts. The BluWave Value Creation Index shows a more than 11% increase in Q3 value creation activity year over year. It is evident that PE firms are running towards the storm, treating economic uncertainty as an opportunity rather than a setback.

Number two, technology is surging as digitization continues to be embedded in the post-COVID world. Private equity firms are equipping portfolio companies with data and analytics capabilities to enable data-driven decision making and workflow automation. We’ve seen technology activity rise from 8% of all activity in Q3 2021 to 15% of all PE activity in this past quarter, and we expect to see technology activity remain high as firms continue to invest in subscription-based software companies due to their stability during volatile economic times.

Lastly, human capital remains private equity’s primary area of focus accounting for 36% of all activity in the BluWave Activity Index for Q3 2022. Firms continue to take strides to ensure the teams in their portfolios are top notch and well-equipped for success. This quarter we saw a surge of PE firms bringing in “wartime generals” with specialized skillsets equipped for the “new now” that can help guide portfolio companies to success in the current economic environment.

It is our hope that the information in the Q3 BluWave Insights Report will give you incremental edge as you build the best businesses in the world. If you’d like to learn more and get the report, please contact any member of the BluWave team or follow the link below. Onward.

Interim CFOs – Why Use Them?

Interim CFOs are a powerful resource that can be used in a wide array of ways.

In this video, BluWave’s Founder & CEO, Sean Mooney, and Managing Director, Houston Slatton, discuss some of the most common uses of interim CFOs and the benefits to both the PE firm and the portfolio company.

You can learn more about the finance resources we have, including interim CFOs, FP&A experts, and more here.



Video Transcript

Sean Mooney, Founder & CEO: Hi, my name is Sean Mooney. I’m the founder and CEO of BluWave. I’m joined here today by my colleague, Houston Slatton. Today we’re going to discuss one of the most popular use cases in the BluWave toolbox, interim CFOs.

So Houston, how does your team know who’s really good and what’s needed for a private equity grade interim CFO to exceed the standards of a private equity firm?

Houston Slatton, Managing Director: Sure, yeah, it’s a great question, Sean.

First, we’ve got dedicated research teams that are constantly mapping these markets to know who’s really good, know where they’re really good, and know what their specialties are.

Secondly, we use frameworks that you developed over your time in private equity, Sean, to be able to assess them and rate them against particular skills and capabilities, but through thousands of iterations, we’ve been able to take those and take them to the next level and beyond (check out our post that covers the five things to consider when hiring an interim CFO here).

SM: I think you guys have done a great job at that. Candidly, I was pretty good at it. I could do it but I was the king of brute force and it was a craft project every single time, and so what I think you guys have done a great job is through seeing it and doing it over and over and over again, developing these tightly owned processes for assessing who’s really, really excellent at things. I think you’ve done a great job. What do you think about next in terms of other things that you do?

HS: One, we vet them specifically for every opportunity. We want them to give us the “heck, yes,” or “no,” which means really we want them to be self-aware and only tell us it’s a good fit if it really is if it’s a 10 out of 10 project. They’re proud to be in our network, so we get that honesty, but then we also hold them accountable as well, by working with our clients to collect that feedback along the way at the end of projects, to hold them accountable and make sure they’re great.

SM: I think that’s a really powerful part of what we do, is this whole circle of trust. People who are invited into this network are proud to be in it, and they do everything they can to be excellent over and over and over again because it supports their success, and our clients’ success, in this symbiotic fashion. That’s great.

Through what you’ve seen in our client base, Houston, what are some of the ways that people are using interim CFOs?

HS: Sure. I guess one of the top ones is just the unanticipated departure. When a CFO may leave for any number of reasons, it’s great to bring somebody in that can keep their hands on the wheel, keep things moving quickly and continue to make sure the company’s producing at an excellent level.

We also see a lot of groups that need somebody to come in once a deal closes to do what we call professionalize the finance function, get the right monthly reporting packages in place, make sure that the PE firm is getting the information it needs, do any conversions, transformations, things like that to make sure that the finance function of the portfolio company is really up to private equity grade.

SM: Yep, and I think that’s a great emerging use of this resource in that they not only can get things done faster with more speed and certainty, but they get to show, particularly newer CEOs and CFOs, what really good looks like at the private equity standard when a new deal kicks off? What about on the other side of the equation?

HS: As PE firms start to think about selling a company, CFOs have a lot on their plates already, and so we’ve had clients who will bring in an interim CEO or an FP&A resource that can help respond to diligence requests, assess data, pull reports, and allow the full-time employees of the company to keep things moving while keeping the sale process moving without delay.

SM: Yep. I think that is one of the other really surging use cases for interim CFOs or FP&A professionals. The modern-day M&A process is fast and furious, and the second you have to hit pause you can see valuations decline. Our best clients right now are using that so they can run at a really fast pace and not lose momentum during a sales process, so I think that’s another great thing to think about for this type of really excellent professional.

HS: Sure.

SM: I think those are some great insights around a tool that’s been around for a long time in private equity, but is being used in different ways. One of the things that I’ve learned probably most since moving from private equity to BluWave is that experience and velocity and laps around the track really, really matter. When I was in private equity, I would do things episodically and it was hard to become an expert at them.

At BluWave we’re doing things thousands and thousands of time for the very best private equity firms. We have the highest standards in the world and that helps us become increasingly better and better and better every day, and it’s gotten to the point where we’re trusted by more than 500 of the world’s top private equity firms to help connect them with the very best third parties, who we’re very proud to work with as well.

If you’d like to learn more about BluWave and how we can help you, please feel free to reach out to Houston or any member of the team or me, and we’d be happy to do anything we can to help give you just a little more excellence, a little more alpha with ease, in a way that’s supportive of your success. Thank you very much.

Q2 2022 BluWave Insights

Every quarter our team analyzes the projects we work on with our 500+ PE firm clients to get a birdseye view of the market. You can request your copy here to view all of the trends that we have seen over the past quarter.

Key findings from Q2 include value creation remaining strong due to the record number of deals made at robust valuation multiples during 2021, inflation continuing to wreak havoc on global economies, and the recessionary pressures availing substantial opportunities for all of the best business builders.

Learn more about the insights we gleaned from the report by watching the video below.

To request the full the report, click here.


Video transcript:

BluWave has a unique vantage in the North American economy. While working with more than 500 of the world’s top business builders, we’re able to understand unique insights into how and why the best business builders in the world are assessing opportunities and building value in their portfolio companies. Here are some of the unique insights we generated during Q2 2022. The name of the game in the second quarter was value creation. Value creation accounted for 68% of all activity funneled through the BluWave engine. Value creation was so robust during this last quarter for a number of reasons. Number one, private equity firms invested in a large number of companies last year so they’re acting on those investments to begin transformation. Number two, deal flow is down. A lot of the best companies were sold last year. Other companies are pausing their ambitions as the economic cycle is softening and the results slow in kind. The other mega trend that is readily apparent in our data is the specter of inflation. The private equity industry is not resting on its laurels. It’s taking aggressive action to raise prices, reduce costs, and bring in the right people with the right skills for the current times. It’s our hope that the data and insights we’re sharing will help you build your business with more speed and certainty. If you’d like to learn more and get the full report, please contact any member of the BluWave team or follow a link below.

Q1 2022 BluWave Insights

Every quarter our team analyzes the projects we work on with our 500+ PE firm clients to get a birdseye view of the market. You can request your copy here to view all of the trends that we have seen over the past quarter.

Key findings from Q1 included value creation at a historical high, deal flow reflecting 2019 versus 2021, & inflationary pressures impacting how firms thought about everything from pricing to talent.

Learn more about the insights we gleaned from the report by watching the video below.

To request the full the report, click here.


Video transcript:

BluWave has a unique vantage in the private equity industry, working with more than 500 of the world’s top private equity firms across thousands of projects in due diligence, value creation, and preparing for sale. From this activity, we’re able to discern unique insights regarding how and why the world works. The top insight of the first quarter of 2022 relates to value creation. A staggering all-time high record 78% of initiatives tracked in the BluWave Activity Index related to value creation. Here are a few other trends that you might find helpful. Human capital is becoming increasingly important in private equity. With the fallout from The Great Resignation still alive and well, firms are struggling to fill key roles, which has resulted in an increase in time and resources invested in human capital. Across the BluWave Activity Index, 42% is related to human capital, which is up from 36% in the previous quarter. Firms have been utilizing specialized HR resources to recruit A-level talent, retain key players, and bring in critical interim skill sets. One of the biggest trends we’re seeing in private equity and the broader global economy is inflation. We’re seeing PE take proactive measures using specialized third-parties to help them pass through rising input costs, defend against price increases, and hone the operational efficiency of their portfolio companies. For more unique private equity insights, request the BluWave Q1 Insights Report today by following the link below or by contacting us at info@BluWave.net.

Top 50 Private Equity Innovator Awards | 2022

We are pleased to announce the inaugural 2022 Top 50 Private Equity Innovator Awards, an award recognizing firms that represent the top 1% in the private equity industry as determined by BluWave for their innovative practices in:*

  • Proactive Due Diligence Practices
  • Transformative Value Creation
  • Progressive Private Equity Firm Operations
  • ESG

The BluWave Top 50 Private Equity Innovator Award recipients were selected based upon a rigorous assessment in consultation with leading limited partners, investment bankers and other thought leaders in the private equity ecosystem. Partnering with more than 500 leading private equity firms, we have a unique perspective that enables us to understand best practices and innovation in the private equity industry.

“Private equity is a driving force in the economy, supporting the growth and development of virtually every type of business and providing more than 11 million jobs in America,” says Sean Mooney, Founder and CEO, BluWave. “We congratulate these top 50 private equity firms that are taking uniquely innovative approaches to building businesses and creating sustainable value for a wide range of stakeholders.”

BluWave also recognizes Lexington, Kentucky headquartered MiddleGround Capital with the Innovator of the Year Award due to the company’s achievements across due diligence, value creation, PE firm operations, and ESG. MiddleGround makes control equity investments in B2B industrial and specialty distribution businesses. The firm was founded by John Stewart, Lauren Mulholland, and Scot Duncan in 2018. MiddleGround partners with small and mid-sized businesses, providing extensive operational resources to help them build and grow. The firm is a signatory to the United Nations-supported Principles for Responsible Investment, which provides a framework for investing responsibly and integrating ESG practices into investment practices.

You can discover further information on the BluWave 2022 Top 50 Private Equity Innovator Awards, including the selection process, selection criteria, and recipients, here.


*BluWave, LP has not received investment capital from and holds no ownership interest in the PE firms evaluated or recognized under the Top 50 PE Innovator awards program. BluWave received no compensation from any of the PE firms in connection with this awards program. However, BluWave may otherwise provide services to the PE firms and/or portfolio companies, but BluWave confirms that its assessment of the PE firms was independent of any such service arrangements. Top 1% in the PE industry is based on BluWave’s review of the more than 5,000 PE firms in the U.S. and Canada from which 50 PE firms were selected as award recipients.

2021 Annual BluWave Insights

Every quarter our team analyzes the projects we work on with our 500+ PE fund clients to get a birdseye view of the market. For Q4 of 2021, we not only pulled together our quarterly insights but also analyzed year-over-year trends dating back to 2019 to gain a deeper perspective (grab your copy here).

Key findings from our annual analysis included a sharp increase in the rise of human capital activity and rebounding of operational investment post-COVID.

bluwave activity index

Learn more about the insights we gleaned from the report by watching the video below.

To request the full the report, click here.

The Experts Weigh In: Reflecting on Themes from 2021

One of the advantages of providing specialized solutions for more than 500 PE funds and business leaders is that we gain a 360-degree view about what is impacting portfolio companies and the private equity industry as a whole. From our hundreds of interactions with fund managers, interim executives, business leaders, and experts from across industries we learn about trends, themes, and opportunities that affect all aspects of PE. As we look ahead to 2022, we reflect on some interesting insights that we gained from our network, as well as our founder and CEO, in 2021 that point to themes to watch for in the year ahead.

Theme 1: Focus on people as core strategy

While it may seem counterintuitive in such a technology- and-data-obsessed culture, what we’ve seen the past year (with no sign of slowing down) is a commitment to focusing on talent and culture as a core part of business strategy. With an anemic and highly “flexible” job market, companies are thinking of innovative ways to attract and retain top talent in order to compete, including giving the CHRO a seat at the table.

The expert’s take: “I believe human capital is one of the most valuable assets of any successful company. End of story. We have put in place a strategy to have our portfolio companies hire a Chief HR Officer—a role that drives strategic thinking, fundamental change through processes, and design efficiencies. This person’s role is to think strategically about the business, then marry that strategic thinking with decision-making around human capital. He or she understands long-term objectives and implements a hiring strategy to meet these objectives. It was a game-changer for our companies and enabled us to swiftly drive change and make money for the shareholders.” — Matthew Garff, Managing Director at Sun Capital 

Theme 2: Public policy and its key role for PE

Recently, Congress and the current Administration have put forth measures that could affect the private equity industry and have a negative impact, particularly on women investors. The industry employs over 11 million Americans and supports thousands of small businesses; a fact that sometimes gets lost when legislators are just focused on the balance sheets of the funds.

The expert’s take: “Washington is trying to move very quickly: it’s like being in a baseball game but not knowing what inning you’re in. Oftentimes the intention of these proposals isn’t nefarious or ill-intended; rather, haste makes waste and politicians are drinking massive amounts of information from a firehose. One minute they are talking to someone like me, with a private equity agenda. The next minute, it’s someone from higher education, renewable energy, or critical infrastructure. Our job [as industry insiders and lobbyists] is to inform them about the realities and potential negative consequences in a non-incendiary way so they will actually listen; subsequently, we hope they make decisions based on the data-rich information we have provided.” — Pam Hendrickson, Vice Chair at The Riverside Company 

Theme 3: Specialized talent offers a competitive advantage

One theme that started to stand out in 2021, and will likely continue to be true for years to come, was top-level executives leaving companies in search of more flexible, specialized projects that put them in the driver’s seat. What does this mean for the PE industry? A shift in focus to interim, specialized talent who can quickly and accurately provide results during the process of due diligence, recruiting, and beyond.

The expert’s take: “The private equity industry used to be about optimizing companies to get attractive returns. Today, it’s very competitive with hundreds of sponsors participating in every auction, often paying perfect prices for imperfect companies. To stand out, PE firms need to see something that’s not in the investment bank’s book. General insights from generalist advisers don’t cut it anymore. We’re equipping our clients with specialized resources that identify unique information that gives them a fundamentally different perspective in a competitive process.” — Sean Mooney, founder/CEO of BluWave

Theme 4: Prioritization of remote work

After years of testing the idea of working from home, the last two years have catapulted the acceptance of remote work—and working from anywhere—to the top of the “normal” list. In fact, companies report that a substantial number of new employees are prioritizing the ability to work remotely even ahead of a robust benefits package.

The expert’s take: “Candidates who were fortunate enough to be employed during the pandemic but unfortunate enough to deal with the constant disruption and stress are now coming up for air and looking around for new adventures. In tandem with this ‘fancy shiny object’ job search, most candidates learned that much of their knowledge and skills could be effectively managed remotely. That’s a game-changer. Once people figured out they could live in Park City, Utah while working for a company based in New York City, many of them made substantial lifestyle changes to strike that elusive work-life balance. It almost gave people permission to shed old norms and start fresh. They went from thinking, ‘I’m going to be stuck in an office for the rest of my life,” to “holy cow, I can work on the ski slopes!’ — William Tincup, President & Editor at Large for Recruiting Daily

Theme 5: Scarcity and its future implications

One thing is certain—from supply chain to the workforce, scarcity seems to be a theme du jour, if not douze mois une année. But how troublesome is it as we move into 2022, and what can we hope for in terms of how the economy will adjust?

The expert’s take: “Usually shortages are a sign of price controls, and usually when people say ‘we don’t have enough workers’ it means that the price they have to pay is too high to get the workers. Historically, there have only been shortages when raising prices is forbidden. This happened with gas controls in the 1950s. The puzzle with today’s shortages is why don’t suppliers just raise prices? My presumption is that they are afraid of being judged as gougers either by their customers or by the government. Eventually, prices will increase, instead of the other option: not having products. It’s already starting to happen. This will help eliminate the pressure on the supply chain.” — Russ Roberts, host of EconTalk and Hoover Institute Research Fellow 

Theme 6: The rise of impact investing with a focus on ESG

Almost every investor you talk to these days, whether for a public or private company, has one thing top of mind: how are our portfolio companies performing against ESG standards, including the initiatives around diversity, equity, and inclusion (DE&I). While ESG has been an important reporting tactic for years, only in the last two has it reached the tipping point. Many firms have already seen a positive impact by investing in diverse workforce development, and it seems that it is definitely possible to have success with a triple bottom line investment thesis.

The expert’s take: “We recently made an investment in a waste management company and our investment thesis was to formalize all policies and procedures, then top grade the management team. After implementing our suggested changes, the company attracted a more diverse workforce, which in turn embraced the ‘professionalization’ of the company. This included the way the company related to and communicated with its diverse customer base. As a result, the company improved its margins, increased customer retention, and was better positioned to win larger contracts from commercial customers.” — Colleen Gurda, Founder of Riveter Capital

Theme 7: Family wealth expands into new industries through collaboration

Family wealth, most often managed by family offices with a staff of ten or fewer employees, is reaching beyond the usual suspects of real estate and legacy business toward direct investments in emerging markets. What was once thought to be “old money” is now shapeshifting with younger generations of family members at the helm, many of whom are interested in collaborating with other family offices to expand their reach.

The expert’s take: “Direct investing has been the core strategy for families for decades. What we’ve seen is an increase in collaboration between family offices that happened less regularly before. For the most part, private equity has been taking the lead on lower market buyouts; and families see the upside and potential of that. Pooling resources allows families to reduce risk [in industries they aren’t as familiar with] and take advantage of companies that land between $3M and $20M EBITDA, who are looking to sell. Families are also looking at platform plays such as buying up HVAC companies and other firms within an industry. We are also hearing a lot of talk now about ESG, and also “business drivers” both of which contribute to innovation.” — Glen Johnson, President of Membership at Family Office Exchange 

Theme 8: As consolidation continues, culture is a top priority

While company culture is certainly an important part of any organization’s success, during and after an acquisition the focus on maintaining a “healthy culture” is paramount—and is often the difference between a smooth or rocky outcome. Add-ons and consolidations will continue to be at record highs in 2022, and acquirers are best served to create a solid strategy to ensure culture remains at the top of the priority list.

The expert’s take: “Here’s what we’ve learned with nearly 75 acquisitions under our belt, some of which worked and some didn’t. First and foremost, it has to be a business fit. A lot of people will buy companies when there isn’t a reason for the companies to be together. It’s just about size and irrelevant to the core business; you see this a lot with tech companies. But it’s not only about the business fit; there also has to be a cultural fit.” — Troy Templeton, Managing Partner at Trivest Capital

Why BluWave was built with deal quarterbacks in mind

As a deal quarterback in private equity, Sean Mooney often struggled with getting connected to the PE-grade, specialized resources he needed to drive differential success. Sean found himself spending lots of time searching for providers on google and calling friends in search of an exact-fit service provider. This made the diligence process time-consuming and stressful. It also left only a small amount of time for the other things that matter. In order to combat this pressing issue, Sean came up with the idea for BluWave. In fact, Sean created BluWave specifically with deal quarterbacks in mind and is someone who did the job himself. Now, BluWave helps deal quarterbacks get time back in their day and gives them confidence in the third-party resources that they are utilizing.

We are here to provide deal quarterbacks with the exact-fit, private equity grade service provider they need, exactly when they need them.

Learn more about how BluWave can help deal QBs specifically in both due diligence and value creation.

If you are a deal quarterback that struggles with due diligence or value creation, we would be happy to connect with you and provide for the need you have, just contact us here.

Buyouts Magazine: More effective sourcing of service providers promises benefits

BluWave founder and CEO, Sean Mooney,  recently had the privilege of sitting down with Buyouts Magazine for a keynote interview in their Fund Services Special Report December issue. In the interview, he specifically highlighted the importance of proper use of service providers in private equity.

In this report, he covered the topics of:  

  1. Why private equity firms must use third-party service providers
  2. Why it is hard to use third parties successfully 
  3. The opportunity cost of not using third-party service providers
  4. How specialization is giving BluWave clients unique competitive edge in both due diligence and value creation 
  5. Trends we have noticed in the private equity industry given our unique vantage point of serving over 500 PE firms 

These topics made for a great interview about service providers in the private equity industry and how to use them effectively. If you would like to read the full interview on the Buyouts website, you can do so here. 

Additionally, if you would like to check out the full Buyouts Fund Services Special Report December issue, you can do so here. 

Are you in need of an immediate, exact-fit, PE-grade third party? We’d be happy to connect you to the one you need. 

Q3 PE Industry Insights

Every quarter our team analyzes the projects we work on with our 500+ PE fund clients to get a bird’s eye view of the market. This report (grab your copy here) calls out the trends that we are seeing across thousands of projects.


Key findings include deal surge continues – but due diligence is still a major area of focus, value creation is gaining momentum – one thing to specifically call out is that portfolio company operation performance and improvement had a huge spike in Q3.



To see these insights and more, watch the video below.

To get the report, click here and we’ll get that over to you.





A Record-Breaking Year for PE: Pitchbook’s Q2 Report

With PE funds fighting an uphill battle last year amid a global pandemic, Q2 2020 industry reports were shrouded in uncertainty. Across the globe, organizations fought against a looming economic collapse as businesses folded and life as we knew it shut down for months.

Despite the shifting tides, we witnessed first-hand the resilient nature of the private equity industry. Around this time last year, we published our analysis of the National Bureau of Economic Research’s study on PE and financial fragility that found that PE-backed companies were more resilient and rebounded more quickly than their non-PE-backed peers during the crisis.

One year later, we’re seeing that the study held up…and then some. In the last 18 months, the PE industry has shown tremendous growth despite an ever-changing economic environment. In PitchBook’s Q2 2021 US PE Breakdown, it was reported that middle market and billion-dollar deals are reaching unprecedented levels “thanks to the speedy economic recovery, demand for high-yield debt, an abundance of dry powder, and the looming threat of a capital gains tax hike.”

The report outlined how surging LP activity has brought not only the PE industry but also those it supports from harrowing lows to meteoric highs in just a few months. Here are some key highlights from Pitchbook’s Q2 findings:

Overall Market Trends: A Record-Breaking Year

  • PE firms have closed on 3,708 deals worth $456.6 billion in H1, which is about two-thirds of the total deal value for 2020. H1 2021 is also on track for a record-setting year in PE exit deals.
  • The Q2 inflation pop is signaling a move toward a potential rate increase by the end of 2023. The core consumer price index increased by 3.8%.
  • The White House’s proposed increase from 20% to 39.6% in the marginal capital gains rate has “spurred a dealmaking frenzy.” Pitchbook is seeing business owners race to realize profits from sales before the end of the year.

Areas of Growth: The Driving Factors

  • Funds worth $5 billion or more (“mega-funds”) accounted for the bulk of capital raised, “but both middle-market managers and first-time funds are also finding success as the increased appetite for PE benefited funds of all sizes.”
  • Corporate bonds and private debt also accrued significant activity in Q2.
  • Investment in cybersecurity is on the rise. PE dealmaking in software continued to post was strong in Q2 2021 and cybersecurity emerged as a particular area of focus. This makes sense, as the pandemic also engendered an increase in remote-work-related cybercrime.
  • Distributions to LPs and high returns numbers across all fund sizes are set “to provide additional tailwinds” moving forward. Also, platforms that saw significant expansion under PE sponsors are now coming to market and achieving healthy valuation step-ups.

As our economic recovery continues, many PE firms and PE-backed companies can start to look past pandemic-related issues and get back to their missions: building and scaling stronger businesses. Having the hard data to demonstrate the powerful buoyancy of private equity, we can move forward confident that it’ll take more than a sudden recession to curb this industry.

To read the full Q2 report, visit Pitchbook’s site here.

Interested in gaining more detailed Q2 insights? Check out our Q2 report here.