New PitchBook Report: Private Equity Breathes New Life into Under-Resourced Companies Across America
In 2021, private equity invested $119 billion to help nearly 600 “unloved companies” stand on their own, grow, and succeed
WASHINGTON, D.C. — Today, the American Investment Council (AIC) and PitchBook released a new report highlighting private equity’s growing investment in “carveouts,” a term used to describe transactions involving under-loved, under-resourced, or misaligned business units nestled in much larger companies.
Drew Maloney, AIC President and CEO, released the following statement about the report:
“Private equity’s calling card is fixing companies. This report shows how the private equity industry is breathing new life into undervalued and misaligned businesses nationwide at a record pace. This is yet another example of how the private equity industry is investing in America, strengthening and scaling promising businesses, and saving jobs throughout the country.”
This new report details:
- The private equity industry’s process for “carveouts” — “carveouts are about identifying teams and businesses that are lagging in their current situations and giving them a chance to prove themselves. Instead of being on the backburner of bigger corporations, these business units are given the resources they need to operate as their own companies.”
- Recent examples of carveouts — Private equity firms identify hundreds of those businesses, buy them from their parent corporations, and make them independent companies — often with new names, logos, and management teams. The report includes several case studies of creative carveouts, including Discovery Education, GE Lighting, Core & Main, and Evoqua Water Technologies.
- New data — In 2021, private equity firms invested over $119 billion to carveout nearly 600 new, standalone companies — a 52 percent increase from 2020. Over the past decade, private equity firms have invested over $700 billion and carved out over 4,000 new, standalone companies.
Additional key findings from the new report, “Diamonds in the Rough: How PE Breathes New Life into Unloved Businesses,” include:
- Business Products & Services: Private equity has invested $220 billion into the business products and services industry since 2012 and over $30 billion in 2021 alone.
- Manufacturing: Despite setbacks in U.S. manufacturing caused by disrupted global supply chains and the COVID-19 pandemic, private equity’s investment in the manufacturing sector reached $170 billion over the course of the last decade.
- Renewable Energy: Private equity has long been a champion of investment in renewable energy. This past decade alone, private equity has invested over $120 billion into the renewable energy sector as part of its carveouts strategy.
- Software: As software’s market share has risen over the past decade, private equity has closed dozens of innovative deals with leading software companies such as Dell Technologies, Intuit, and Compuware.
The full report can be found here.