BluWave, a private equity-focused Intelligent Network, has released new data on how private equity (PE) funds and their portfolio companies are allocating resources as the global economy continues its recovery from the pandemic and subsequent economic contraction. The PE market was inundated with a historic number of companies looking to sell during Q2 2021, a shift reflected in the increasing attention to due diligence in PE projects — from 29% of activity in Q1 2021 to 42% in Q2 2021.
“Over the past several months, the number of companies looking to sell has sky rocketed,” says BluWave founder and CEO, Sean Mooney. “This is because of tax concerns and ongoing high valuations in the market. PE funds are investing heavily in due diligence to ensure their valuations are informed and they have strong value creation plans in place.”
BluWave’s Q2 2021 proprietary insights report includes data from thousands of PE projects, and its key findings include:
- Human Resources remains private equity’s number one focus area, accounting for 40% of overall project activity. Recruiting is becoming more difficult as the PE-grade talent market tightens and timelines to find permanent executive hires get longer.
- As the emphasis on due diligence excellence increases, PE funds are focusing on strategy and HR as their top due diligence focus areas.
- As valuations soar, PE funds are increasingly looking for specialists who can bring unique insights to their areas of focus and give groups a competitive advantage.
- Due to high demand, M&A service provider capacity is under historic pressure. The PE funds that have demonstrated greater abilities to secure essential due diligence resources have had a competitive advantage during M&A processes over those who cannot move as quickly or confidently.
- More fundamental investments in portfolio company value creation remain important and are gaining momentum as the year progresses. Operational improvement investments have increased from the #7 ranked value creation activity in Q4 2020 to #4 in Q2 2021.
To download the full report, please visit our BluWave Q2 Insights page.