Private equity buyout firms are on course to make more investments in the technology sector in 2018 than in any year prior. As at November there have been 1,079 tech-focused private equity-backed buyout deals announced globally, approaching the record of 1,096 set the previous year. In fact, the number of private equity-backed buyout deals in tech has increased year on year since 2009, although the value of these deals peaked at $177bn in 2015, driven in part by the $67bn merger of Dell and EMC.
Add-on deals are accounting for an increasing proportion of tech buyout deals, comprising 42% of the number of deals made in 2018 as at November. By contrast, public-to-private transactions are on the decline, making up less than 1% of deals this year.
Tech-focused private equity is a major industry, with funds now holding more than half a trillion dollars in assets under management as of the end of March 2018. This is twice as large as the sector was just five years ago, demonstrating the rapid rise of tech-focused private equity.
This momentum seems unlikely to slow in the near future: fund managers focused on tech currently hold a record $190bn in dry powder ready to be deployed, and fundraising in recent years has been consistently strong, with more than $70bn raised in each of the past three years. In 2018 YTD there have been 286 tech-focused private equity funds closed, raising a total of $68bn. This brings the average fund size to $238mn – the largest ever for tech-focused private equity funds.
Follow this link to see more data from the Private Equity Sinks its Teeth into Tech factsheet.