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Why was 2021 a Record Year for Private Equity?

By Generational Equity

01/18/2022

Why was 2021 a record year for private equity?

The answer to that question is clear: Record amounts of committed capital to invest AND tremendously aggressive PE firms that were strategically adding on to their platform companies to position them for a tremendous economic rebound in late 2021 and into 2022.

According to a recent article in the Wall Street Journal:

Private-equity firms have announced a record $944.4 billion worth of buyouts in the U.S. so far in 2021 (through the end of November), 2.5 times the volume in the same period last year and more than double that of the previous peak in 2007.

Let that last statistic sink in for a bit: The previous peak for PE buyouts was before the Great Recession in 2007 – and 2021 more than doubled that number!

Again, according to the WSJ:

Driving the urge to go big are the billions of dollars flowing into private-equity coffers as institutions such as pension funds seek higher returns in an era of low interest rates. Buyout firms have raised $314.8 billion in capital to invest in North America so far in 2021 (through the end of November), pushing available cash earmarked for the region to a record $755.6 billion, according to data from Preqin.

$755 billion is simply a staggering number to comprehend. And since add-ons are the lion's share of targets for PE firms now, this is great news if you have a business that is buyer ready (and you are prepared to negotiate with these professional buyers).

Now you can wait for the phone to ring and try to get a good deal, OR you can be proactive and begin working with a leading middle market investment banking firm like Generational. As of the end of November 2021, the number of deals we have closed was 60% over 2020 and we expect that to go even higher as we enter the frenzied deal making at the end of the year. 

And the great thing about PE firms is that you don’t necessarily need to exit your company immediately (unless you want to). Middle market PE firms are famous for working with existing ownership/management to grow the business to unprecedented levels. Simply put, PE firms bring capital and management expertise to the table that you most likely could not even imagine. 

Generational has literally helped over 1,100 business owners on their exit journeys over the years, and we plan on doing so for decades to come. Our passion is helping entrepreneurs grow and protect the investment they have made in their businesses; an investment that is not just financial, but also physical, emotional and mental. We help you with the ROI on these intangible costs!

To learn more about how we can support you as well, please use the following links:

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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