According to Pitchbook, a leading private equity research firm, acquisition activity by private equity groups has seen steady improvement. Last week PitchBook released its 1st quarter private equity investment data which shows that PE investment posted its third straight quarterly increase during the first quarter with 300 completed U.S. investments, totaling $14 billion of invested capital. It was the best quarter in over a year and means that the bottom for private equity investment was probably the middle of last year. According to Pitchbook, the mid-market continues to represent the majority of PE investment activity, accounting for 85% of the deal flow.
This is very good news for owners of mid-market businesses who have been postponing the sale of their companies until the economy recovers. With three straight quarters of improved acquisition activity it is clear that PEGS who have been sitting on significant amounts of dry powder are becoming more active (March 15, 2010 - Dry Powder Grows to $500 Billion). As we discussed last month, the $500 billion in dry powder either needs to be invested in the next 2-3 years or returned. Since equity groups really don't enjoy returning committed capital to investors, it is a safe bet that they will become more and more active as the year progresses.
Read the entire article on The March Group's M&A Musings blog.