DATA AS O F J U N E 3 0 T H , 2 0 1 8
1H 1H 2018 2018
THIS INFOGRAPHIC REPORT AND ALL ASSOCIATED CHARTS, PREPARED BY CASSEL SALPETER & CO. WITH DATA FROM PITCHBOOK AS OF JUNE 30TH, 2018, 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
157
2009
131
20 10
172
201 1
181
2012
242
2013
209
2014
261
2015
273
2016
262
2017
281
1H 2018
118 0
50
100
150
200
250
300
As we have noted in prior reports, all 1H data is preliminary as data reporting generally lags behind actual activity. After a record 2017, the first half of 2018 remained strong with 118 total Florida PE deals completed. This surpasses the previous initially reported record set in 1H 2017, which saw 109 deals completed (note, the final reported number for 1H 2017 as seen in the Florida PE Deal Flow by Quarter chart is 145 deals completed; further exemplifying the underreporting of initial reported data). This increase is not surprising as recent years have seen increasing amounts of fundraising, and thus, greater availability of capital.
Florida PE Deal Flow by Region
100%
TA M PA B AY
90% 80%
SOUTHWEST
70%
SOUTHEAST
60% 50%
PA N H A N D L E
40% 30%
NORTHEAST
20%
CENTRAL
10% 0% 2008
2009
2010
2011
2012
2013
2014
2015
2016 2017
1H 2018
The Southeast has consistently remained the region with the most Florida PE deal flow, accounting for approximately 36.4%, down from approximately 42.7% of total 2017 Florida PE deals. Still the Southeast region more than doubled any other region in Florida. The Central, Tampa Bay, Southwest, and Northeast followed with approximately 18.6%, 17.8%, 15.3%, and 10.2%, respectively. The panhandle trailed the group with approximately 1.7% of total Florida PE deals.
Florida PE Deal Flow by Quarter
90
85
80
81
77
76
60
62
61 52
52
50
45
41
40
40 30
56
57
33
31
32 24
36
53
48
42
39
59
57 59
74 69
68 68
70
76
65 59
63 59
64
62
65 53
49 39
30
26
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
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018 started out strong with 65 Florida PE deals completed in 1Q, consistent with the 62 deals completed in 4Q 2017. While 2Q 2018 seems to have slowed down somewhat in terms of completed deals, these numbers may be underreported as previously indicated by 1H 2017 initial reported data having a total of 109 deals completed, and now show a total of 145 deals completed.
2018
Q&A Q // How do you see the recent developments regarding the U.S.-China trade war affecting Florida PE firms and their portfolio companies in Florida?
SCOTT SALPETER & JAMES CASSEL
A // Portfolio companies relying on raw materials or other components and products from China may see an adverse impact on costs affecting margins and profits due to U.S. tariffs. Therefore, valuations for existing portfolio companies may be negatively affected by the reduced profits if they cannot increase prices.
Q // How do you believe PE strategy will evolve as a result of large strategic players beginning to consolidate across multiple industries? A // Amazon closed its acquisition of Whole Foods, CVS Health announced its acquisition of Aetna, and Cigna announced its acquisition of Express Scripts; all three deals are recent examples of cross-sector M&A. PE firms may try to follow this lead and use cross-sector add-on’s to diversify their existing portfolio companies.
Florida PE Deal Flow by Type
100%
P L AT F O R M C R E AT I O N
90%
G R O W T H / E X PA N S I O N
80% 70%
RECAP
60% 50%
ADD-ON
40%
BUYOUT/LBO
30% 20% 10% 0% 2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
1H 2018
Add-on’s remained dominant as the largest type of Florida PE deals, accounting for approximately 61.0% of total Florida PE deals in 1H 2018. Buyout/LBO and Growth/Expansion (i.e. minority) accounted for approximately 22.0% and 15.3%, respectively. Platform Creation and Recap each accounted for approximately 0.8% of total Florida PE deals in 1H 2018.
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
1H 2018
B2B remained dominant as the largest sector of Florida PE deal activity in 1H 2018, accounting for approximately 33.9%. Healthcare remained ahead of B2C for the third time in our semi-annual report, while IT surpassed B2C for the first time, accounting for approximately 27.1% and 17.8%, respectively. The difference between the Healthcare and B2B sectors is the tightest gap between B2B and another sector we have seen since we began running this report. B2C accounted for approximately 13.6% of Florida PE deal activity in 1H 2018, the lowest percentage we have seen for this sector.
Florida Buyouts vs. Add-ons
73.5%
250
68.7%
59.5% 61.4%
200
65.1%
70.5%
56.7%
80%
68.4%
67.0%
70%
62.4%
60%
53.9%
150
126
134
116
95
80
72
10%
0
2008
2009
2010
2011
BUYOUT/LBO
2012
2013
ADD-ON
2014
2015
2016
2017
20%
26
70
76
69
56
51
79
61
51
31
59
50
40% 30%
68
81
69
100
140
50% 150
1H 2018
0%
ADD-ON %
In 1H 2018, Add-ons accounted for approximately 73.5% of all control investments, a slight increase over recent years, illustrating a consistent trend that PE firms have been focused on building out platforms in their portfolio.
PE-Backed Florida Companies
449
450
424
400
362 378
350
329
396
343
298
300
276 247
250
253
YEAR OF INVESTMENT
219
200
2012-1H 2018
171
150
123
100
85
97
141
2006-2011
109
2000-2005
73
PRE-2000
50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2012 2013 2014 2015
2016 2017
1H 2018
PE-backed Florida company inventory grew slightly in 1H 2018, with an additional 4.4% growth from year-end 2017. While the aging company inventory acquired between 2006 and 2011 is still hefty at approximately 19.4% of the total PE-backed Florida company inventory, the increase in new PE-backed Florida company inventory acquired between 2012 and 2018, accounting for approximately 78.0%, illustrates the use of capital available to PE firms.
Florida PE Exits by Type 90 80
42
70
37
60
29
19
25
30
40
44 29
2013
34
31
2012
13
17
13 12
2011
22
10
20
20
16
30
15
40
27
20
26
50
0 2008
2009
2010
Corporate Acquisitions
2014
2015
2016
2017
1H 2018
Secondary Buyouts
After being surpassed by Secondary Buyouts in 2017 for the first time since we began tracking Florida PE deal activity, Corporate acquisitions has regained its title as the primary exit route for Florida PE deals in 1H 2018, representing approximately 59.4% of total 1H 2018 Florida PE exits.
Florida PE Investments vs. Exits
140
3.0x
120
2.5x
100
2.5x
2.3x
1.9x
1.5x
1.5x
40
2.4x
1.0x 1.7x
2.3x
2.5x
60
2.6x
80
2.1x
2.0x
2016
2017
0.5x 1.4x
20 0
0.0x 2008
2009
2010
Investments/Exits
2011
2012
2013
2014
2015
# of Investments (excl. add-ons)
1H 2018
# of Exits
The Florida PE investment-to-exit multiple decreased in 1H 2018 from 2.4x at year-end 2017 to 1.4x in 1H 2018. The drop in number of investments in 1H 2018 is likely attributed to the numbers being underreported as previously indicated.
Florida-Based PE Firms
70
68 60
56 50
47 40
41 37
30
27
30
32
34
20
10
0
2010
2011
2012
2013
2014
2015
2016
2017
1H 2018
The number of PE firms with headquarters in Florida continues to grow, with 1H 2018 seeing an additional 12 Florida-based PE firms since year-end 2017 and a CAGR of approximately 13.1% from 2010 through 1H 2018. This is the largest increase we have seen to date since we began tracking Florida PE firms, including increases in year-over-year, let alone half year. It will be interesting to see the final number of PE firms with headquarters in Florida at year-end 2018.
METHODOLOGY
PRIVATE EQUITY DEALS This report includes all PE investments (buyout, growth, PIPE, 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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