Just be happy they aren't chasing the geriatric porn biz.*
From Bloomberg, July 12:
- Founder-owned firms make up highest share of PE deals in years
- Atlanta plumber says daily investor pitches are ‘a nuisance’
Local plumbers and lumber-yard owners across the US are feeling a bit like tech entrepreneurs of late — juggling multiple offers from private equity-backed firms that increasingly are targeting mom-and-pop businesses.
Wall Street has been buying into fragmented Main Street industries for years, with dental and veterinary practices among the favorite targets. It’s known as the roll-up strategy – and it’s catching a tailwind right now, and expanding rapidly in household services and building materials.
Small firms account for the biggest share of acquisitions by PE funds and their portfolio companies since the late 2000s, according to data from industry analyst PitchBook. They made up more than 61% of all private equity deals in the first quarter of 2023, compared with an average in the mid-50s over the past decade or so.
“If you acquire enough, you get economies of scale,” says Tim Clarke, PitchBook’s lead private equity analyst. “You just keep rolling rolling, rolling and before you know it you’ve got 10-20% of the market.”
‘They’re a Nuisance’
One reason that approach is popular now, according to Clarke, is that higher interest rates have pushed valuations down across the board. Owners who might otherwise have considered a sale — whether they’re publicly traded companies, or private equity — are holding onto companies in their portfolios instead. As a result, would-be buyers are turning toward smaller privately-owned firms, which also tend to be cheaper relative to their earnings.What’s more, private equity’s enthusiasm for small firms is spreading into industries like plumbing and other trades — which have shown they’re recession-proof, even in the Covid slump, and have room for consolidation because markets are typically divided up among many businesses....
....Japan’s ageing population is already affecting nearly every aspect of society. More than half of all municipalities are designated as depopulated districts, schools are closing and more than 1.2 million small businesses have owners aged about 70 with no successor.
Programmes on the Broadcast Satellite (BS) channels are geared to an older audience, with the commercials a procession of offerings for funeral services, supplements to relieve aching joints and incontinence pads.
Japan’s underworld has not escaped unscathed either: a majority of yakuza are over 50 and there are now more gangsters in their 70s than in their 20s. Meanwhile, senior porn is a growing niche, populated by a handful of silver stars in their 60s, 70s and even 80s....
I know the entrepreneurial among us are thinking "there are some opportunities here."
I was referring to the roll-up possibilities of 1.2 million small businesses but was immediately accused of harboring dreams of being a porn star somewhere down the road.
The idea of private equity getting into the porn business is too terrible to contemplate, though it would give new meaning to the term 'asset-stripping', I'm not sure bankruptcy bust-outs and dividend recaps are a...saaay...
