Private Equity - Industry - North America Market, Share and Trends 2023-2028

Summary of Private Equity

The private equity (PE) industry in North America has seen robust growth over the past decade, driven by strong macroeconomic conditions, abundant capital and an expanding universe of attractive investment opportunities. Total assets under management (AUM) for PE firms focused on North America reached nearly $2 trillion in 2022—an increase of over 80% compared to 2012.

Key factors fueling the industry’s expansion include record levels of dry powder (uninvested capital commitments), favorable lending conditions and an abundance of privately-held target companies looking for new capital and partners to help them accelerate growth. Based on our estimates, we can say that the regional North American Private Equity industry is forecasted to be a $ 2475.44 billion industry in 2029 from $ 1720 billion in 2023 with a CAGR of 6.22 %.

North American PE deal value set new records in 2021 and 2022 that is surpassing the highs of the 2006-2007 pre-global financial crisis boom years. Overall deal count also hit new highs, reflecting PE firms’ ability to deploy capital across the market cap spectrum into small, medium and large-sized companies alike.

The industry continues to evolve— with PE firms raising record-sized funds, pursuing more large-cap buyouts, and expanding into adjacent alternative asset classes like: private debt, infrastructure and real estate. Firms are also boosting their operations capabilities to drive post-acquisition value creation.

Looking ahead— while a potential economic slowdown could temporarily dampen activity, the secular trends benefiting PE in North America still have room to run. The addressable market of privately-held businesses remains immense, projected to facilitate a durable expansion for the industry over the next decade.

Recent Trends and Insights

PE firms in North America raised over $300 billion in 2022 – an annual record that pushed total dry powder reserves above $1 trillion. Top-tier firms have accumulated unprecedented war chests to pursue large-cap deals. The growing scale of PE fundraising has given rise to more mega-buyout funds sized over $10 billion and even $20 billion. These provide firms with more firepower to chase deals over $10 billion.

The largest PE firms have continued consolidating market share, as institutional investors concentrate capital with top-quartile historical performers. The 25 largest PE firms globally now manage nearly 60% of industry AUM. While higher mid-market and large-cap deals grab headlines, PE penetration of smaller companies has also grown substantially. First-time institutional capital investments under $25 million surged to over 3,100 in 2021.

After a cooldown in late 2021 – Special Purpose Acquisition Company (SPAC) deal activity involving PE firms has reignited. SPACs allow firms to take portfolio companies public faster. Over 50 PE-backed de-SPAC deals were announced in 2022. PE firms are providing more minority-stake growth capital to founder-led companies, positioning themselves to buy larger stakes down the road as founders look to retire. This allows firms to get a foot in the door with attractive businesses earlier.

To differentiate themselves the top PE firms are building in-house operations teams spanning digital transformation, procurement, salesforce effectiveness and dynamic pricing – unlocking tangible value creation post-close.

Product Insights

Traditional control buyouts of companies remain the bread and butter of most PE firms. Buyouts accounted for over 70% of capital invested in North America in 2022. Firms are seen engaging their operating expertise and balance sheet support to drive revamps post-close.

Minority-stake growth equity investments have seen outsized growth, nearly doubling from 2012 to 2021. Tech-enabled businesses are attractive targets as PE firms can provide growth funding while positioning for eventual buyouts.

Private debt deployed by PE firms has tripled over the past decade as an ultra-low rate environment drove demand for higher-yielding fixed income products. Strategies include: senior loans, mezzanine debt, distressed for control and specialty finance.

Infrastructure investing has moved mainstream— with PE firms raising record amounts of capital for core areas like renewables as well as social infrastructure projects involving hospitals, affordable housing and schools. Governments have tapped PE as a partner that led to constraints on public funding.

More PE firms have raised permanent capital vehicles (PCVs) like business development companies (BDCs), using these to target more stable cash flowing companies. PCVs provide another lever for PE firms to expand AUM and generate recurring management fees.

Limited partners (LPs) have ramped up co-investments alongside their PE fund commitments to boost net returns. Strategic co-investing also strengthens LP-GP partnerships. PE firms use co-invests to pursue larger deals and manage risk.

Retail investor access to PE strategies has increased, via publicly-traded BDCs, interval funds allowing periodic liquidity and feeder vehicles into institutional main funds. Democratization broadens the fundraising base open to GPs.

Key Companies

Some major players within this vast domain of industry are

• KKR & Co. Inc.
• The Blackstone Group Inc.
• The Carlyle Group Inc.
• Thoma Bravo
• General Atlantic
• Clearlake Capital Group
• Hellman & Friedman
• American Securities
• Oak Hill Capital Partners
• Trilantic North America

Regional Analysis

Northeast US – is the Largest regional market at over 40% of deal value. Deep bench of skilled labor, top universities, and technology hubs. NYC tri-state region remains the epicenter of PE given proximity to LPs. Boston/New England houses a dense concentration of tech, biotech, healthcare deals. The most active region for large-cap buyouts given mature companies and HQ presences.

Southeast US – is one of the fastest growing region, with abundant greenfield opportunities. Population migration trends and pro-business policies attracting investors. Hot spots include Atlanta, Nashville, Raleigh-Durham, and South Florida. Active areas include: financial services, healthcare services, software and consumer products.

Midwest US – is considered to be a manufacturing hub that offers niche industrial deal prospects. Buy-and-build rollup plays prevalent given fragmentation in sectors. Corporate divestitures and founder succession needs drive dealflow. Michigan, Illinois, Ohio and Missouri are most active states.

South Central US – seems to be emerging as a hub for — energy sector deals and have rebounded with the recovery in oil prices. No state income tax in Texas drives migration similar to Southeast. Mid-sized metro areas like: Dallas, Houston and Austin are key markets. Infrastructure investing has grown across ports, airports, data centers, wind farms

Canada is benefitting from business-friendly policies and proximity to US. Toronto and Montreal are established markets with skilled talent pools. Emerging sectors like: cleantech, AI, quantum computing gaining attention. Cross-border commerce and US PE expansion provide growth tailwinds.

Market Segmentation

By Type:

• Buyout funds
• Venture/growth capital
• Distressed/turnaround
• Mezzanine
• Infrastructure

By End User:

• Institutional investors (pension funds, sovereign wealth funds, endowments)
• High-net-worth individuals
• Corporations (corporate venture arms)

By Enterprise Size:

• Large Industries
• Small & Medium Industries

By Country:

• The U.S.
• Canada
• Mexico

Our Methodology

We have offered a well-founded review of the North American regional Private Equity Industry market along with ongoing trends and upcoming projections to highlight proximate investment opportunities in this report. Moreover, an extensive analysis of any future prospects, challenges, competitors, or navigating aspects is also provided. A methodical detailed regional examination is presented.

Primary Research  

Our multi-pronged research approach includes interviews with industry leaders and a global survey of advanced manufacturing professionals to gain qualitative insights. We utilize our proprietary databases encompassing key performance indicators worldwide in order to collate relevant data points. A multivariate forecasting framework considering historical performance, current dynamics and qualitative factors are utilized to develop market sizing and growth projections through 2029.

We supplement our primary research with a careful examination of secondary materials such as– case studies, news stories and references from other sources. Organizations can benefit from the strategic advice and conclusions offered because they will be better equipped to respond to the dynamic nature of this industry and seize emerging possibilities.

We employ a comprehensive and iterative research methodology focused on minimizing deviation to provide the most accurate market estimates. Our research utilizes a combination of bottom-up and top-down approaches across segments and utilizes databases, primary research insights and industry experts for analysis.

Raw data is obtained from multiple sources and thoroughly filtered to ensure only authenticated and validated sources are considered. We collect data from raw material suppliers, industry associations, technology providers, and buyers to gain a holistic perspective.

Quantitative Analysis

Our market estimates are derived through statistical models, beginning with collection of historical data and analysis of macro- and micro-economic factors influencing the market. Gathered information on market dynamics, technology and pricing trends are utilised to build the models.

Econometric and technological models are applied to project short- and long-term market potential respectively. A bottom-up approach is preferred to minimize errors. Key parameters considered include market drivers and restraints, material pricing trends, regulatory scenarios, and capacity additions.

Weights are assigned to these parameters based on impact analysis and market forecasting is performed via statistical tools and techniques. We believe this methodology results in an accurate and realistic market picture.