DATA AS O F J U N E 3 0 T H , 2 0 1 9
1H 2019
THIS INFOGRAPHIC REPORT AND ALL ASSOCIATED CHARTS, PREPARED BY CASSEL SALPETER & CO. WITH DATA FROM PITCHBOOK AS OF JUNE 30TH, 2019, PROVIDES A TOP-LEVEL EXAMINATION OF PRIVATE EQUITY ACTIVITY IN FLORIDA. IT OFFERS IN-DEPTH INSIGHT AND DATA-DRIVEN ANALYSIS OF THE STATE’S PE TRENDS, WITH A FOCUS ON DEAL FLOW ACTIVITY. THIS REPORT INCLUDES ALL PE INVESTMENTS (INCLUDING BUYOUT, ADD-ON, GROWTH, AND RECAPITALIZATION), EXCLUDING REAL ESTATE INVESTMENTS, MADE INTO TARGET COMPANIES WITH HEADQUARTERS IN FLORIDA.
Florida PE Deal Flow by Year 2008
154
2009
134
20 10
178
201 1
181
2012
238
2013
212
2014
261
2015
284
2016
272
2017
297
2018
315
1H 2019
127 0
50
100
150
200
250
300
350
As we have noted in prior reports, all data is preliminary as data reporting generally lags behind actual activity. There has been no slowdown in Florida PE deals completed, even after a record breaking 2018. 1H 2019 surpasses our initial reported 1H 2018 Florida PE deals of 118 (note: the final reported number for 1H 2018 as seen in the PE Deal Flow by Quarter chart was 161 deals completed).
Florida PE Deal Flow by Region
100%
TA M PA B AY
90% 80%
SOUTHWEST
70% 60%
SOUTHEAST
50%
PA N H A N D L E
40% 30%
NORTHEAST
20% 10%
CENTRAL
0% 2008
2009
2010
2011
2012
2013
2014
2015
2016 2017
2018
1H 2019
The Southeast has consistently remained the region with the most Florida PE deal flow, accounting for approximately 39.7%. The Tampa Bay, Central, Northeast, and Southwest regions followed with approximately 21.4%, 19.0%, 7.9%, and 7.9%, respectively. Once again, the Panhandle trailed the group with approximately 4.0% of Florida PE deals. This, however, is a notable jump in number of deals for the Panhandle from the 1.7% and 3.0% in 2017 and 2018.
Florida PE Deal Flow by Quarter 100 92
90
83
82
80
77
77
69 60
60
59 55
53
50 41
40
40
45 35
32
39
31
30
51
55
53
56
76
74
68 64
58
85
82
73
70 60
82
59
64
66
64
61 61
62 61
48
43
41
39 28
27 22
20 10 0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
1H 2019 started out strong with both 1Q and 2Q accounting for about half of the deals. We are surprised by the amount of deals reported in 2Q thus far, as previously mentioned, these numbers may be underreported. With this trajectory, it will be interesting to see where the final count ends up for 2019.
2019
Q&A Q // How did trade policy and new tariffs affect Florida PE investments in the first half of 2019? Will it continue into the rest of 2019?
SCOTT SALPETER & JAMES CASSEL
A // Trade conflicts escalated in 2019, and the end may not be in sight. PE firms are cautious with trade-reliant businesses and are taking a look at the short and long-term effects. This includes the option of alternative sourcing on the buying side and new markets on the sales side. The trade wars are starting to have an effect on businesses and therefore deals.
Q // What should Florida PE firms prioritize in the second half of 2019? A // There has been record high pricing for deals over the past few years and Florida PE firms should try to offload some of their aging, well-performing portfolio companies to reap the benefits of the high returns while it lasts. Time, is of the essence, and it may not be their friend.
Florida PE Deal Flow by Type
100% P L AT F O R M C R E AT I O N
90% 80%
G R O W T H / E X PA N S I O N
70% RECAP
60% 50%
ADD-ON
40% BUYOUT/LBO
30% 20% 10% 0% 2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
1H 2019
Add-ons have consistently been the dominant type of Florida PE deals, accounting for approximately 56.7% of total Florida PE deals for 1H 2019. Growth/Expansion (i.e. minority) and Buyout/LBO accounted for approximately 23.0% and 18.1%. This is the first time since beginning our reporting that Growth/Expansion has accounted for more than Buyout/LBO, indicating that Florida PE firms have more of a willingness to look at and take a minority stake in companies.
Florida PE Deal Flow by Sector
100% M AT E R I A L S & R E S O U R C E S
90% 80%
IT
70% H E A LT H C A R E
60% 50%
FINANCIAL SERVICES
40%
ENERGY
30% B2C
20% 10%
B2B
0% 2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
1H 2019
B2B remained dominant as the largest sector of Florida PE deal activity in 1H 2019, more than doubling any other sector at approximately 37.0%. Healthcare and IT both remained ahead of B2C once again, both accounting for approximately 18.1%. B2C accounted for approximately 16.5% of Florida PE deal activity, in line with 2017 and 2018 for this sector.
Florida Buyouts vs. Add-ons
300
68.0% 250
66.0%
64.6%
60.9%
59.4%
54.3%
71.1%
68.4%
66.5%
75.8%
70%
62.3%
56.4%
60% 173
162
132
138
117
30%
2008
2009
2010
BUYOUT/LBO
2012
2013
ADD-ON
2014
2015
2016
2017
2018
20% 10%
23
87
75
80
80
56
52
75
61 2011
72
101
79
82
0
56
33
58
50
50% 40%
70
69
100
146
200 150
80%
1H 2019
ADD-ON %
In 1H 2019, Add-ons accounted for approximately 75.8% of all control investments, a significant increase over prior years. As we have seen in prior reports, the first half of the year sees a higher percentage of Add-ons, then ultimately levels out around mid-60% by year-end. This is likely due to the nature of the deals being smaller and more readily available.
0%
PE-Backed Florida Companies 700
591
600
601
554 510
500
487 452 418 389
400 350 283 294
300
YEAR OF INVESTMENT
319
255 2012-1H 2019
200
100
167
84
97
112
131
199
2006-2012
145
2000-2005
PRE-2000
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
2011
2012 2013
2014 2015 2016
2017 2018
1H 2019
PE-backed Florida company inventory stayed pretty steady in 1H 2019, with only a slight increase of 1.1% from year-end 2018. The aging company inventory population between 2006 and 2012 is currently at approximately 20.8%, with the majority (approximately 77.2%) being acquired between 2013 and 1H 2019. Notably, the highest percentage in any given year was 2018, making up approximately 15.6% of the total 601 PE-backed Florida company inventory.
Florida PE Exits by Type 90 80
42
70
30
27 17
40
10
6
29
30 2013
39
44 28 2012
33
31 2011
22
10
21
20
16
13
13
30
14
40
28
28
50
32
36
60
0 2008
2009
2010
Corporate Acquisitions
2014
2015
2016
2017
2018
1H 2019
Secondary Buyouts
It seems that corporate acquisitions are back to being the primary exit route for Florida PE deals after a few years of secondary buyouts either surpassing or being closely in line with corporate acquisitions. In 1H 2019, corporate acquisitions and secondary buyouts represented approximately 62.5% and 37.5%, respectively, of Florida PE exits.
Florida PE Investments vs. Exits 3.5x
160 140
3.0x
120 3.2x
2.5x
2.0x
2.4x
2.0x
2.6x
1.5x
2.3x
1.9x
1.8x
1.6x
40
2.0x
1.0x
2.2x
60
2.4x
80
2.2x
100
2017
2018
0.5x
20 0
0.0x 2008
2009
2010
2011
Investments/Exits
2012
2013
2014
2015
2016
# of Investments (excl. add-ons)
1H 2019
# of Exits
The Florida PE investment-to-exit multiple increased in 1H 2019 from 1.9x at year-end 2018 to 3.2x in 1H 2019. There were only 17 exits reported thus far in 1H 2019, which is likely an underreported number as previously indicated.
Florida-Based PE Firms 80
70
72
73
2018
1H 2019
60
56 50
47 40
41 37
30
27
30
32
34
20
10
0
2010
2011
2012
2013
2014
2015
2016
2017
After a significant jump in number of PE firms with headquarters in Florida in 2018, we are not surprised the growth slowed in 1H 2019. 1H 2019 saw an increase of 1 Florida headquartered PE firm, and a CAGR of approximately 12.4% from 2010 through 1H 2019.
METHODOLOGY
PRIVATE EQUITY DEALS This report includes all PE investments (buyout, growth, recapitalization, and add-on), excluding real estate investments, made into target companies, with headquarters in Florida. Only investments made directly by private equity firms or their portfolio companies are counted. Buyout deals are defined as transactions in which the PE investors receive controlling ownership stakes in the target companies. Growth deals are defined as minority investments in target companies. Add-on deals are defined as acquisitions by companies with private equity backing.
FLORIDA-BASED PRIVATE EQUITY FIRMS
PE-BACKED FLORIDA-BASED COMPANIES
This report includes PE firms with headquarters in Florida that were either actively investing or raising funds during the reported periods.
This report includes companies headquartered in Florida that are in part or in whole backed by PE firms.
Cassel Salpeter & Co. is a boutique investment banking firm focused on providing independent and objective advice to middle market and emerging growth companies.
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