3,985 buyout-backed deals is on par with all-time high of 4,006 deals recorded in 2014

In 2016, private equity-backed buyout deal activity saw an increase in the number of deals but a decline in the total value of transactions, with 3,985 deals recorded for a total of $319bn. Preqin expects these figures to rise by up to a further 5% as new information becomes available. This marks an increase from the 3,955 transactions seen in 2015 and is likely to overtake the all-time high of 4,006 buyout deals transacted in 2014, although the year is unlikely to match the combined deal value recorded in the past two years. As expected, North America attracted the majority of buyout investment, seeing 2,137 deals concluded for $190bn, while the total deal value in Europe fell from $93bn in 2015 to $88bn through 2016. Asia and the rest of the world saw aggregate values reach $24bn and $18bn respectively.

Buyout Deals

However, the private equity-backed exit environment cooled slightly in 2016, following a sharp growth period in 2014 and 2015. There were 1,682 exits made through the year, worth a combined $330bn; this signifies a marked decline from the previous year when 1,859 exits totalled $431bn, and is well short of the $465bn recorded by 1,910 exits in 2014, an all-time high for the industry. Nonetheless, exit activity in 2016 remains on a par with 2013 and surpassed all preceding years, as market participants continue to enjoy a favourable exit environment.

Buyout Deals

Other Key Buyout Deals and Exits Facts:

  • Deals by Value Band: Despite only accounting for 10% of all transactions, buyout deals larger than $1bn represented 62% ($199bn) of the aggregate global deal value in 2016. Small-cap deals (less than $100mn) accounted for the majority (54%) of all transactions but just 5% of the total deal value.
  • Deals by Industry: Buyout deals for information technology assets totalled $97bn in 2016, nearly a third (30%) of the combined deal value, while healthcare (13%) and consumer & retail (13%) also saw significant investment. The industrials sector saw 858 deals, the highest proportion (22%) of any industry.
  • Largest Deals: Eight of the 10 largest private equity-backed buyout deals were in the US, including the $15bn merger involving ADT Security Services, the largest transaction in 2016. The $8.6bn acquisition of Finnish games developer Supercell Oy from SoftBank was the second largest deal globally.
  • Sales to GP: While trade sales continue to dominate the exit market, sales to GP are an increasingly common exit route. There were 531 sales to GP made through 2016 worth a combined $79bn, accounting for 32% of all exits made and 24% of the total exit value.
  • Exits in US and Europe: North America saw 798 exits in 2016 worth a combined $189bn, while in Europe 670 exits were made for an aggregate value of $113bn. The US accounts for nine of the top ten exits made in 2016, including the $4.4bn exit from MultiPlan, while the other exit was made in Spain.

Buyout Deals

Comment:

“The opening quarter of the year represented some of the lowest levels of global deal flow seen in recent years, but since then buyout deal activity has rebounded well and is on track for a record number of transactions. The total number and aggregate value of exits across the industry remain lower than the extremely high levels seen throughout 2014 and 2015, however 2016 still represented another successful year of exit activity.

2017 seems likely to present a continuation of the levels of activity in the buyout and exit markets recorded in the past few years. Record high levels of capital available to fund managers, as well as continued strong fundraising, means that there is a lot of capital ready to be put to work, and activity is likely to be correspondingly strong. Preqin’s most recent surveys also suggest that most GPs expect exit activity to maintain or increase. Investor enthusiasm for the private equity asset class remains as strong as ever, and fund managers will be hopeful that they can navigate a congested deal-side market to find opportunities that offer good value for money.”

Christopher Elvin – Head of Private Equity Products, Preqin