2014 represented the highest ever aggregate exit value for private equity buyout fund managers, with a total of 1,604 exits globally valued at $428bn. This is up over 30% on the total value of exits in 2013, and is the highest ever annual value of private equity-backed buyout exits. This has resulted in a significant increase in the level of capital being returned to buyout fund investors, which had almost surpassed the full-year 2013 amount as of June 2014 (the latest data available). The total value of deals in 2014 reached $308bn globally, the highest annual amount since 2007.
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Other Key Private Equity-Backed Buyout Deal Market Facts:
- In 2014 there were 3,423 private equity-backed buyout deals announced globally with an aggregate value of $308bn, representing the highest aggregate deal value since 2007 and a 10% increase on 2013.
- North America saw $181bn of deals in 2014, a 2% fall on the aggregate value in the previous year despite an 11% rise in number of deals to 1,899.
- The total value of deals in Asia in 2014 ($42bn) was 68% higher than the 2013 figure, compared to a 16% drop in number of deals in the region to 270 in 2014.
- The aggregate value of public-to-private transactions saw a notable drop from accounting for 30% of the total deal value in 2013 to 10% in 2014, due largely to the take-private acquisitions of H.J. Heinz Company, Dell Inc. and BMC Software in 2013 which totalled $59.8bn.
- Small-cap investments valued at under $250mn accounted for 68% of the number of private equity deals announced globally in 2014, down from 76% in 2013. Deals in the mid-market range ($250mn – $1bn) comprised 24% of all deals in 2014, compared to 18% in the previous year.
- A primary consequence of the exit activity has been the record level of capital being distributed to investors. Full-year distributions for 2013 by buyout fund managers hit a record $226bn. As of the end of June 2014, the latest data available, buyout funds already had returned $224bn to investors, meaning 2014 is set to be a record year.
- The $11.5bn merger between Tim Hortons, Inc. and 3G Capital-backed Burger King and was the largest private equity-backed buyout deal in 2014, and the trade sale of Alliance Boots GmbH to Walgreen Co. for $15bn was the year’s largest private equity-backed exit.
“2014 was a significant year for both private equity buyout deal making and exit activity. The total value of deals done by private equity fund managers reached the highest annual amount since 2007, and the value of exits from private equity-backed portfolio companies over the past year reached record levels. The exit activity is particularly significant, as many managers were still looking to exit deals done in the pre-crisis years, and have been waiting for improved selling conditions.
The most noticeable consequence of the record value of exits is the capital being paid back to investors. Full-year distributions for 2013 by buyout fund managers hit a record level. Over the first half of 2014 – the latest data available – buyout funds had already returned almost the same amount of capital as in the whole of 2013, suggesting full-year 2014 will significantly surpass the previous year. As many investors look to maintain and in some cases increase allocations, a significant proportion of this capital is likely to be reinvested which in turn will drive fundraising for GPs.”
Christopher Elvin – Head of Private Equity Products, Preqin