Private Equity Buyout Deal Activity Accelerates In Q2 2017

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Industry improves from slow Q1, but remains below levels seen in 2016

The private equity-backed buyout deals market saw some signs of recovery in the second quarter of 2017, as 1,001 deals were announced worth an aggregate $83bn. Preqin expects these figures to rise by around 5% as more information becomes available, putting the quarter comfortably ahead of the $55bn recorded for deals announced in Q1. However, activity in 2017 so far remains behind the levels seen through much of last year: Q2 2016 saw a much sharper recovery, recording 1,113 deals worth a total of $100bn. Activity in Q2 2017 was driven by dealmaking in North America and Asia, as Europe saw deal values fall to their lowest level since Q1 2016.

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Key Q2 Buyout Deals and Exits Facts:

  • Q2 2017 saw 1,001 deals announced, worth a combined $83bn. This is on par with the 1,008 deals recorded in Q1, but the total deal value is higher than the $55bn recorded in that quarter.
  • However, it does not approach the level of activity seen in Q2 2016, when 1,113 deals were announced worth a total of $100bn.
  • North America saw 537 deals worth $55bn, up from $25bn seen in Q1. Asia recorded 46 deals worth $11bn, almost twice the $6bn seen in the same quarter of 2016.
  • Europe saw its lowest level of activity since Q1 2016: 361 deals worth a combined $15bn were announced for the region, compared to 347 deals worth $21bn recorded in Q1 2017.
  • Industrial deals accounted for the largest proportion of deal volume (22%), while healthcare deals represented 27% of total deal value, the greatest share.
  • The largest deal announced in Q2 was the $6.9bn acquisition of Staples, Inc. by Sycamore Partners.
  • Overall exit activity declined for the fourth consecutive quarter, as just 381 exits were recorded. However, total exit value improved from Q1, at $59bn.
  • North America saw $36bn in exits from buyout-backed companies, while Europe saw just $18bn.
  • Trade sales accounted for almost half (48%) of exit activity, and the largest share (47%) of total exit value.
  • The largest private equity buyout-backed exit recorded in Q2 was the sale of Visma Consulting by GIC, HgCapital, ICG and Montague Partners for NOK 45bn in June.

Private Equity Buyout Deal Activity

Christopher Elvin, Head of Private Equity Products:

β€œThe first quarter of 2017 saw a sharp slowdown in overall deal activity from private equity buyout funds. While Q2 has seen some momentum regained for the industry, it has not matched the sharp recovery seen in Q2 2016, which was the highest quarter of that year. Total deal value has exceeded Q1, but does not approach the level of activity seen in Q2 of last year.

The acceleration in dealmaking through the quarter seems to be due to higher activity in North America, which saw almost twice as much capital deployed as in Q1. Similarly, Asia deal activity accelerated, surpassing the deal value seen in either the previous quarter or the equivalent quarter of 2016. However, buyout deal activity in Europe saw a sharp slowdown – activity was on par with Q1 2016, which was an industry-wide slump. Activity in the region must recover quickly if it is to retain the momentum of previous years.”

Private Equity Buyout Deal Activity

Article by Preqin

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