For the third year in a row, the median private equity-backed exit in North America and Europe has trended downward in size across all three primary routes of liquidity.

The typical corporate acquisition in 2016 came in at $138.1 million, a 13.7% decline from the $160 million notched in 2015. After the significant growth in median exit sizes from 2013 into 2014, it’s important to note that the numbers recorded in 2016 were still somewhat aligned with those seen in 2010 and 2011.

PE-Backed Exits

Given that these figures are still relatively healthy on a historical basis, the drivers behind the decline aren’t so much systemic as cyclical. As exit volumes have declined steadily over the past few quarters, it’s likely that both supply and market valuations took a toll—the supply of PE portfolio companies that could come to market and justify the typical level of valuations necessarily diminished after most of the best-prepared businesses were sold off from 2013 to 2015.

Moreover, sector-specific dynamics have come into play across the same period, with PE buyers moving into lower reaches of the middle market to consolidate fragmented providers in healthcare and insurance. As the prevalence of secondary buyouts has continued at a fair clip, the relatively steeper decline in their median size makes sense, since larger or more specialized PE firms are snapping up the smaller-yet-built-out platforms of those PE managers that engaged in the initial buying and building.

Of course, the most dramatic slump in size of them all—that of IPOs backed by PE investors—is part and parcel of the doldrums observed in the IPO market in general. Last year was marked by an untoward uptick of volatility in public markets, whether driven by political or economic events, which only encouraged wariness in investors and businesses looking to list. Those that did list tended to be smaller and not quite as exposed to critical pressures derived from political occurrences or economic trends.

Note: This column was previously published in The Lead Left.

More for data and analysis, be sure to download our ?2016 Annual PE & VC Exits report!

Article by Garrett James Black, PitchBook