Global Private Equity-Backed Buyout Deal Flow Rebounds In Q2 2016 by Preqin

$89bn in aggregate deal value represents 77% increase from Q1, with more than 1,000 deals concluded

Preqin’s Q2 2016 buyout deals and exits update finds that the total value of private equity-backed buyout deals in Q2 reached $89bn, up significantly from a disappointing Q1 which saw $50bn in aggregate deal value. Although Preqin expects this total to rise by 5-10% as more data becomes available, global deal value does not match the $102bn seen in Q2 2015. On the other hand, the 1,004 deals announced in the quarter did exceed the 940 deals recorded in Q1, and represents the highest quarterly figure since Q4 2014.

The private equity buyout-backed exit market expanded in Q2 2016, as 434 exits were announced globally, worth a combined $90bn. This represents an 18% increase in the number of exits and a 33% increase in exit value from the previous quarter, which saw 369 buyout-backed exits worth $68bn. However, it is still significantly less than the same period last year, in terms of value, when 453 exits were announced globally, worth a total $126bn.

Global Private Equity-Backed Buyout Deal Flow

Other Q2 2016 Private Equity-Backed Buyout Deal and Exit Facts:

  • Deals by Region: North America and Europe accounted for 89% of the deal flow in Q2, as the two regions recorded 534 and 356 deals respectively. However, the $57bn aggregate deal value for North America is more than double the $25bn seen in Europe.
  • Investment Type: Leveraged buyouts represented the largest proportion of both the number of deals (40%) and the aggregate deal value (53%) in Q2. Although the 16 public-to-private deals in the quarter account for just 2% of the number of deals, they represent 21% of total deal value.
  • Deals by Industry: Information technology deals accounted for just under a quarter of aggregate deal value (24%), down from 28% in Q1 but still the largest proportion. Although deals in the Industrials sector represented 22% of the number of deals, they were worth just 9% of the aggregate value in the quarter.
  • Exits by Type: Trade sales accounted for half the number of exits and 51% of the aggregate exit value in Q2, the largest proportion of both totals. The number of IPOs and private placements of buyout-backed companies tripled from the low levels seen in the previous quarter.
  • Largest Deal and Exit: The largest buyout-backed deal in Q2 2016 was also the largest exit: the $7.5bn May sale of MultiPlan, Inc. from investors including Ardian, Partners Group and Starr Investment Holdings to a consortium including GIC, Hellman & Friedman and Leonard Green Partners.

Global Private Equity-Backed Buyout Deal Flow

Comment:

“The first quarter of 2016 was a period of relatively low activity for the private equity buyout deals market, with both the number of deals globally and the aggregate deal value falling. The second quarter has seen in excess of 1,000 deals announced, and a significant uptick in overall deal value, a sign that managers are returning to the levels of pricing and competition seen through much of 2015.

The buyout-backed exit environment also saw increased activity in Q2 compared to the first part of the year, and is beginning to approach the levels seen throughout 2015. IPOs and private placements saw particular growth over the quarter, with the number of exits tripling and the aggregate value increasing significantly; nonetheless this exit type still accounts for less than a quarter of the total exit environment.”

Christopher Elvin – Head of Private Equity Products, Preqin

Global Private Equity-Backed Buyout Deal Flow