1H 2021 Florida PE Report

DATA AS OF JUNE 30TH, 2021

A VIEW OF 1H 2021: FLORIDA PE DEAL REPORT

THIS INFOGRAPHIC REPORT AND ALL ASSOCIATED CHARTS, PREPARED BY CASSEL SALPETER & CO. WITH DATA FROM PITCHBOOK AS OF JUNE 30TH, 2021, 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

2010

174

20 11

185

201 2

233

2013

207

2014

25O

2015

286

2016

281

2017

337

2018

350

2019

352

2020

386

1H 2021

254 0

50

100

150

200

250

300

350

400

Florida PE deal activity set a record-setting pace through 1H 2021, with 254 deals completed. Many signs point to this robust Florida deal activity continuing, including the proposed capital gains tax increase.

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% 2010

2011

2012

2013

2014

2015

2016

2017 2018 2019 2020

1H 2021

The Southeast region remained the prominent area for Florida dealmaking, accounting for approximately 40% in 1H 2021. This is in line with 2020 where the Southeast region accounted for approximately 39% of all Florida PE deals.

The Central and Tampa Bay regions followed accounting for approximately 19% and 18%, respectively. The Northeast regions saw a slight increase, jumping from approximately 9% in 2020 to 11% in 1H 2021. The Southwest and Panhandle lagged, accounting for approximately 9% and 3%, respectively.

Florida PE Deal Flow by Quarter 147

150 140 130

123

120 110

103

100 90 80 70

62

60 50 40

51 53 52 49

50

48 38

43

38

59 58 51

64

84

83

80

80

79

60

63

99

97

95 82

93

86 74

68 69

77

90

86

95

83 77

73 63

60

54 52

39

29

30 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

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Florida PE deal activity saw robust deals completed in 1H 2021, with Q1 2021 being the second highest quarterly deal quantity we have on record. Frenzied dealmaking will likely continue throughout 2021 with the proposed capital gains tax making business owners contemplate a sale more seriously.

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% 2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

1H 2021

While Add-On’s have always been the largest type of Florida PE deal activity, we have seen a significant increase in percentage over the years, from approximately 49% in 2016 to approximately 60% in 1H 2021. Buyout/LBO and Growth/Expansion followed with approximately 20% and 19%, respectively. Leveraged Recapitalization and Platform Creation both accounted for less than 1%.

Florida PE Deal Flow by Sector

100% 90%

M AT E R I A L S & RESOURCES

80%

IT

70%

H E A LT H C A R E

60% 50%

FINANCIAL SERVICES

40%

ENERGY

30%

B2C

20%

B2B

10% 0% 2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

1H 2021

Despite B2B remaining the top sector for Florida PE deal activity, accounting for approximately 39%, the Healthcare and IT sectors held steady into 1H 2021 accounting for approximately 19% and 17%, respectively. Conversely, the B2C sector plunged from approximately 17% in 2020 to 13% in 1H 2021. The Financial sector accounted for approximately 8%, while both Materials and Resources and Energy each accounted for less than 5% of Florida PE deal activity.

Florida Buyouts vs. Add-ons

70.8%

350

67.1% 300

61.0%

68.3%

66.5%

66.3%

72.5%

74.9% 66.5%

60.9%

61.5%

70%

56.7% 60% 214 200

40% 152

136

195

50%

102

118

30%

51

108

76

99

83

88

76

20% 56

50

61

53

50

74

80

83

150

137

151

200

179

250

100

80%

0

10% 0%

2010

2011

2012

2013

BUYOUT/LBO

2014

2015

ADD-ON

2016

2017

2018

2019

2020

1H 2021

ADD-ON %

Add-on’s continue to propel Florida PE deal activity, accounting for the majority of Florida PE control investments in 1H 2021. Hitting an all-time high in our records, Add-On’s accounted for approximately 75%, illustrating that an inorganic growth strategy has become essential for PE firms’ buy-and-build strategy.

PE-Backed Florida Companies 600 556

571

496 477

500 442 390 359

400 311 271

300

320

340

287

244 249

YEAR OF INVESTMENT

217

170

200

100

72

84

96

110

121

2014-1H 2021

138

2007-2013 2000-2006 PRE-2000

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2011

2012

2013 2014 2015 2016

2017 2018 2019 2020

1H 2021

Florida PE-backed company inventory continued to grow, with an additional 15 new PE-backed Florida companies. This growth has slowed in comparison to 2020 and it will be interesting to see what year-end 2021 brings. Of interest is the Florida PE-backed company inventory acquired between 2007 and 2013 for a second report has shown a diminished proportion of exit activity as compared to that seen in 2019.

Florida PE Exits by Type 100 90

3

80 3

70

25

35 2017

23

50 2016

16 2014

24

31

2013

30

26

2012

37

38 24

19

31

20 10

4

15

23

21 6

12

30

6

31

2

40

3

36

50

1

33

4

4

31

4

30

60

35

2

0 2010

2011

Corporate Acquisitions

2015

Secondary Buyouts

2018

2019

2020

1H 2021

IPO

The primary exit route for Florida PE deals in 1H 2021 was secondary buyouts, which for a second report reverses the trend in which corporate acquisitions was a more popular exit option. Given the increase in IPOs and SPACs globally, it is surprising to see it again not reflected in our Florida PE data.

Florida-Based PE Firms 110

102 100

95

90

79

80

72 70

60

56 47

50

41 40

30

27

30

32

34

37

20

10

0

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

While the number of PE firms with headquarters in Florida increased, it did not skyrocket like we saw in 2020. It is important to note that the likely increase in 2020 was due to many firms moving to the sunshine state while working virtually for the Florida warmth and for tax purposes.

1H 2021

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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