by John McGovern
Last year saw private-equity (PE) deal counts and total deal value rise by a double-digit percentage. With over $1trn in capital ready to deploy, expected regulatory relaxations and market optimism, the outlook for PE deal-making seems bright. This is good news for independents wanting to exit in the next few years.
For the past 8-12 years the industries that GMA serves (media, events & info services), the deal flow has been remarkably consistent for both portfolio company investments and bolt-ons. Portfolio companies or platforms refer to the initial investment in a company by PE firms with a goal to grow the company through “bolt-on” acquisitions – usually of independently-owned businesses.
The first 3-4 years matter most for bolt-ons
PE firms are typically most active in looking for bolt-ons in the first 3-4 years of an investment in a portfolio company. Looking in four-year periods, we saw nearly the same number (12-13) of PE firms enter our spaces (through a portfolio company or platform investment) in 2013-16, 2017-20 and 2021-24, for a total of 36. Looking at the data this way also smooths out the effect of Covid.
In fact, 2020 was one of the best years with seven new portfolio companies/platforms created. Half came after March 2020 and, yes, some of those had significant revenue from face-to-face events. Bolt-on activity tracks closely with new portfolio companies/platforms because of that general 3-4-year rule.
Over 150 bolt-ons expected by 2029
Given the historical data, the portfolio companies/platforms created in the 2017-20 period will contribute to another robust 150-175 bolt-ons for 2025-29. It could be as high as 175, given the likelihood that many will come on the market themselves and have new owners to start the bolt-on cycle again – aligned with their investment thesis for the next stage of growth.
Another positive sign is that of the available capital for bolt-on activity: $7bn in dry powder for PE firms active in these industries. (Dry powder refers to uninvested capital or, in simpler words, unspent money in the piggy bank!) This does not include any of the recently added funds, which average around $800m, that will be on hand once the initial investment is made.
Tariff issues
As we go to press, the US is seeing a small ripple effect from the tariff situation. US government entities, Canadian attendees and some exhibitors are cancelling appearances at US shows. However, the M&A market is still red hot and 2025 is already on pace with 10 bolt-on acquisitions in Q1.
Grimes, McGovern & Associates is a leading lower middle-market Mergers & Acquisitions firm advising media, events and information services businesses globally. See our transactions here.
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