Private Equity Buyout Deals In Europe Falter In Q3 2016

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Private Equity Buyout Deals In Europe Falter In Q3 2016 by Preqin

Aggregate deal value in the region falls by 43% from the total seen in Q2, amid wider decline in deal activity

Preqin’s update on private equity-backed buyout deals in Q3 2016 finds that 919 deals were recorded in the quarter, worth an aggregate $90bn – this figure is expected to rise by a further 5-10% as more information becomes available. This aggregate deal value is on par with the $89bn in deals seen through Q2 2016, but the number of deals worldwide has declined 13% from the previous quarter. Activity in Europe fell sharply: the region recorded 303 buyout deals worth a combined $15bn, down from 371 deals worth $27bn that were seen in Q2. Across the first three quarters of the year, there have been 981 deals in Europe, the highest Q1-3 total since 2007 (1048), but aggregate deal value has only reached $53bn, the lowest Q1-3 figure seen since 2012 ($49bn).

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In North America, by contrast, the aggregate value of deals recorded during the quarter has reached $60bn, surpassing the $55bn seen in Q2 to represent the best quarter of 2016 so far, although it remains some way off the $100bn in deals recorded in Q4 2015. Despite this, the number of deals seen through the quarter fell to 500, down from 560 in Q2, although it remains comparable with previous quarters. Asia, meanwhile, saw both the number of deals and aggregate deal value contract for the fourth consecutive quarter, as 53 private equity buyout deals reached an aggregate $4bn.


Private Equity Buyout Deals

Private Equity – Other Key Buyout Deals and Exits Facts:

  • Investment Type: Leveraged buyouts accounted for 41% of the global number of deals, and 59% of aggregate deal value, the largest proportion of either. Add-on deals represented 35% of deals, down slightly from 37% in Q2, but just 9% of aggregate deal value, compared to 17% the previous quarter.
  • Deals by Industry: Information technology deals once again accounted for the largest proportion of total deal value, 32%, up from 24% in Q2. Despite representing the same proportion of the overall number of deals, consumer-related deal value fell sharply, from 19% in Q2 to 10% in Q3.
  • Deals by Value Band: There were 27 private equity-backed buyout deals worth $1bn or more in Q3 2016, which accounted for a combined $59bn, 65% of global aggregate deal value. Deals worth less than $100mn accounted for 52% of the number of deals, and 4% of aggregate deal value.
  • Buyout-Backed Exits: Q3 saw 408 exits from buyout-backed companies worth $81bn. This represents a decline of 11% in the number of exits and 12% in aggregate exit value compared to the previous quarter. While this level of activity does not compare with Q3 2015, it still represents significant improvement from Q1.
  • Exits by Region: North America saw 207 buyout-backed exits in Q3 worth a combined $46bn, down slightly from the $52bn recorded by 214 exits the previous quarter. In Europe, the number of exits fell from 216 to 146 in the same period, while the total value of exits fell from $35bn to $26bn.
  • Largest Deal and Exit: The largest private equity-backed buyout deal of the quarter was the $4.4bn buyout of Israeli gaming company Playtika Ltd. The largest buyout-backed exit, meanwhile, was the trade sale of Spanish hospital provider Quirónsalud for €5.8bn.

Private Equity Buyout Deals


“After the opening quarter of the year, which represented some of the lowest levels of private equity buyout deal activity seen in recent years, Q2 2016 represented something of a bounce-back towards the record levels seen in the latter part of 2015. It seems as though this momentum has broadly carried into Q3, with global deal numbers falling slightly, and aggregate deal value remaining on par with Q2. Although overall activity in the first three quarters of 2016 has not compared to the high figures seen in 2015, it remains comparable with activity seen in 2012 and 2013.

The situation in Europe is much less positive, with distinct falls in both the number of deals and the aggregate deal value compared to Q2. However, so far in 2016 there has been a lot of activity, despite the lower overall values recorded. This could be an indication that some fund managers are using the volatility caused by the Brexit referendum and uncertain political atmosphere across the continent in order to acquire attractive investment prospects at lower prices.”

Christopher Elvin – Head of Private Equity Products, Preqin


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