BluWave, a private equity-focused, highly curated B2B marketplace, has released its most recent data on PE industry trends. Robust deal flow has persisted, which has coincided with an emphasis on due diligence and strategic add-on acquisitions. Notably, due diligence activity persists at historically high levels equal to 39% of activity mix in Q3 2021— a proxy for the private equity industry’s level of new investment activity and an indicator of a healthy overall investing environment. Additionally, PE firms are gaining confidence in the future and proactively investing in business transformation opportunities, evidenced by value creation activities increasing from 59% in Q2 2021 to 61% of all BluWave initiatives in Q3 2021.

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BluWave founder and CEO Sean Mooney observes that the M&A industry continues to see a shift in how PE firms approach due diligence: “Due diligence by the private equity industry has evolved from a ‘trust but verify’ exercise into a process that enables the pre-identification of business transformation and value creation opportunities.”

Here are a few of the key findings from BluWave’s Q3 proprietary insights report:

● Due diligence activity remains at historically high levels, accounting for 39% of PE activity in the BluWave ecosystem. PE firms are assessing companies holistically with an eye towards unidentified business transformation opportunities. Strategy, technology, and operational assessment activities continue to be widely utilized within the BluWave Due Diligence Index.

● PE funds have made value creation a top priority, with value creation accounting for 61% of initiatives in the BluWave ecosystem. Human Resources is by far the most active category within BluWave’s Value Creation Index.

● The PE industry is gaining confidence in making longer term transformative investments in their companies. Operational performance enhancement investments have risen from #13 in the BluWave Value Creation Index in Q3 2020 to # 3 in Q3 2021.

● Emerging trends in the private equity industry include the increasing prominence of ESG, software, and digital marketing. Specialization remains a core focus for PE funds, as it allows them to adapt to changing circumstances quickly and identify and execute on unique value creation opportunities.

BluWave Senior Director, Houston Slatton, shares, “As the economy rebounds from the crippling effects of COVID, we are seeing the PE industry proactively help companies navigate the new normal, similar to how they did at the start of the pandemic”.

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