There are a lot of private companies, and while this is great for private equity firms looking for growing companies to invest in, sourcing and chasing the right ones to add to their portfolios is a rather large undertaking. According to the Federal Reserve Bank of St. Louis, nearly 5.5 million new businesses applied for licenses in the US in 2023 alone, adding to the millions of existing private companies.
But which ones have what it takes to rise to the top? We used Sourcescrub’s deal sourcing platform to dig in and find out which businesses are surpassing their peers and proving they have what it takes to succeed. So, without further ado, here are the top 10 fastest-growing private companies in North America from 2023:
BW Health Group supports and builds partnerships with the life sciences industry for the evolving healthcare ecosystem. The company offers hub services, a pharmaceutical supply chain, a strategic agency, a creative agency, pharmaceutical consulting, brand development, product launch, payer pricing, and loss of exclusivity (LOE) strategy.
Based out of Salt Lake City and serving the surrounding area, Families First Pediatrics offers a range of healthcare services for children, from infants to teenagers. Families First Pediatrics provides families with both in-office and in-home care to fit their evolving needs, from medical and dentistry to mental health and orthodontic care.
For nearly 30 years, Independent Power Systems (IPS) has helped its customers harness the power of nature through in-house installation for solar, heating, cooling, and electrical solutions. The company focuses on maximizing returns, paired with unparalleled craftsmanship, design excellence, and the most advanced products on the market to ensure clean-energy systems that are high-impact and ultra-durable.
KAL Group is a diversified transportation and logistics service-driven organization formed in 2014. Headquartered in Fontana, California, and with a vast ecosystem of facilities, the company ensures small fleet business owners are empowered to achieve operational excellence.
With several locations across the island, the physicians, nurse practitioners, and staff of the Medical Offices of Manhattan use the most innovative methods and the latest technology to ensure their patients make the right decisions and receive the proper care.
My Orthodontist's mission is to be the premier provider of affordable, high-quality orthodontic services in New Jersey. The company provides personalized orthodontic treatments through a customized, one-of-a-kind treatment plan using the latest technology to help customers achieve the beautiful smile they’ve always wanted and the self-esteem they deserve.
New England Sheet Metal and Mechanical Co. (NESM)
For over 100 years, NESM, now with the Lyles Construction Group, has provided full-service mechanical contractor delivery services to its clients. The company provides exceptional value, professional service, and optimal solutions in the mechanical industry's planning, design, fabrication, construction, and maintenance segments.
PingWind is a CVE-certified Service-Disabled Veteran-Owned Small Business (SDVOSB) that focuses on increasing the security and performance of its customers’ IT and operational assets through IT services and IT consulting. The company combines cybersecurity, information technology, and supply chain services to help clients secure information, modernize systems, and optimize performance.
A full-service real estate firm headquartered in Minnetonka, MN, Roers Companies, LLC has developments across the Midwest. By partnering with individual investors to deliver institutional-quality apartments in high-demand neighborhoods, the company's diverse projects include senior living, student apartments, affordable apartments, and mixed-use developments across six states.
Sturdy Corporation is a global supplier of mechanical, electrical, electronic, and software solutions for a diverse range of markets. The company focuses on applications designed for harsh environments, using its on-site capabilities to design, manufacture, validate, and distribute quality products to meet customers’ changing needs and specifications.
Knowing the top 10 fastest-growing private companies in North America can jumpstart firms' search for investment opportunities. However, there will be plenty of competition from other firms looking for growing companies to invest in. Understanding the larger market and what the fastest-growing private companies have in common can help firms capitalize on these trends and beat their competition.
The size of 2023's fastest-growing companies is surprisingly diverse, with employee numbers ranging from a handful up to 1,000. However, nearly half the companies in our list have between 51 and 200 employees, with an overall distribution that’s more normalized than in other instances of our "Best in Bootstrapped" series posts.
This year's fastest-growing private companies in North America have one of the most varied founding dates of any of our previous series. While the majority of the companies in our list — 60% — were founded in the 21st century, the rest were founded as many as 103 years ago in 1920. Clearly, the staying power of some of these companies, coupled with their recent growth rates, makes them attractive investment opportunities.
Seven different industries are represented in our list. Perhaps continuing their growth from the pandemic years, healthcare companies comprise over a third (36%) of the list, with manufacturing a relatively close second at 24%. Surprisingly, only 16% of the companies are in technology — a 24% drop since our report in the first half of 2023 — with retail and real estate taking the fourth and fifth spots at 8% each.
While private company revenue information can be rather difficult to find, robust deal sourcing platforms such as Sourcescrub can use available data signals to provide this valuable information to dealmakers. As for the fastest-growing private companies in North America, none of the top 25 have an estimated revenue of under a million, and more than half fall within the $11 - 25 million range. Less than a quarter bringing in more than $25 million and a scant 4% land in the over $50 million category.
When looking for the fastest-growing startups, it's important to understand the macro market conditions and use these to guide your dealmaking methods. Which industries are growing the most, the number of deals made, capital available to deploy, and more should all factor into your decision-making process. Let’s look at a few of the top market trends coming out of 2023.
In more ways than one, 2023 was a year for the record books. Despite a surge in deal activity in late December to the tune of $40 billion, the overall M&A market reached only $3.2 billion — a 15% drop and the lowest total in a decade. While deal volume was disappointingly low at just over 12,000 deals, dry powder continues to pile up and has reached a new record of $3.7 trillion, according to S&P Global.
For firms, 2024 must be a year where they take advantage of these market conditions. Put simply, the pressure to transact has never been higher. The firms that innovate and are creative with their dealmaking methods while using all the data available to them to make smarter decisions are the ones that will thrive.
The collapse of the tech M&A market, where multiples have fallen 45% — from 25 in 2021 to 13 in 2023 — has left many firms and companies struggling. Many of the fastest-growing tech companies of 2023 were the public giants: NVIDIA (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and ServiceNow (NYSE: NOW), among others, with few private tech companies making the usual lists.
In fact, most of the fastest-growing industries from 2023 involved food & beverage, manufacturing, and energy. According to IBISWorld, fruit & nut farming and solar power will be the fastest-growing industries in 2024. Bain & Company reports healthcare and energy may be particularly promising given late-2023 deal activity.
Regardless, it's clear that the growing valuation gap will continue to be a hurdle for firms focused on tech company deals. So, while tech will likely always be a crucial part of private equity, firms shouldn't be afraid to investigate other industries that can offer considerable opportunities.
Add-on acquisitions have been increasing in popularity for some time, and 2023 saw a rise in alternative deal structures and methods of deploying capital. Carve-outs, for example, reached 10.7% of all private equity buyouts in Q4 of 2023. Similarly, the total assets under management (AUM) in the private credit market reached $1.5 trillion and is expected to nearly double to $2.7 trillion by 2027.
So, while firms may be searching for the fastest-growing private companies to beef up their portfolios, it's important to remember the path to securing a deal with those companies may take forms other than total acquisitions or buyouts.
If 2023 was a year defined by anything, it was its departure from the norm. Many firms hoped for a strong rebound and to see deals return to their 2021 levels, but were disappointed. However, the backlog of activity from the latter part of 2023 may mean the first half of 2024 sees a flurry of deals being made.
Firms looking to get ahead of their competition need an advantage. Often, data is the key to sourcing and closing deals with the companies that will be most beneficial. Deal sourcing platforms such as Sourcescrub can provide all the data your firm needs to understand the market and source hidden opportunities before anyone else. Download the full list of the fastest-growing private companies in North America here.
