An interesting trend, which I’ve highlighted a couple times now, is that while private equity’s new investments and exits have declined by 60% and 66%, respectively, since 2021, fundraising remains near its peak 2021 levels, creating a tricky situation where funds are raising more money from investors than they are distributing.
Source: Bain Capital
One consequence of this prolonged period of high fundraising activity is that private equity is now involved in more mergers and acquisitions than at any point in history, with Bloomberg finding that at least 40% of deals reported to the federal government for antitrust review (the threshold for review is deals valued at at least $119.5 million) involve private-equity investors. That’s up from 10% in 2001.
As private equity has grown more prominent, one particular area that’s seen an uptick in PE involvement has been trade businesses like HVAC and plumbing companies, with business-school-educated PE investors scouring small-town USA for home-service businesses, creating Main Street millionaires along the way. From The Wall Street Journal:
PE firms across the country have been scooping up home services like HVAC—that is, heating, ventilation and air conditioning—as well as plumbing and electrical companies. They hope to profit by running larger, more profitable operations.
Their growth marks a major shift, taking home-services firms away from family operators by offering mom-and-pop shops seven-figure and eight-figure…
