Record private equity investment
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Historically, there were only a handful of investors who were active in the sector, with M&A dominated by trade purchasers. Customer concentration, a lack of earning visibility and a dependency on a handful of key personnel, were regularly barriers to private equity getting opportunities through investment committee.
From 2021 onwards, private equity participated in over a third of transactions
Yet from 2021 onwards, private equity participated in over a third of transactions. This has been driven by the advent of agencies underpinned by technology platforms. Tangible IP has made investors more comfortable than just people-led expertise, with greater predictability of revenue streams and a point of differentiation in a crowded market. Successful exits have also helped confidence in the sector, largely fuelled by tertiary buyouts such as Bridgepoint’s investment in Equistone-backed Inspired Thinking group.
With many investors opting for a buy and build model for platform assets, business owners have been attracted to a quasi-private equity deal structure, with the ability to capitalise on the benefits of a future exit.
