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Portfolio > Alternative Investments > Private Equity

Q1 Private Equity Buyout Deals Contract Sharply

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Private equity-backed buyout deals globally declined sharply in the first quarter, falling to 874 deals worth $44 billion from 962 deals worth $137 billion in the fourth quarter, a post-financial crisis high, alternatives data provider Preqin reported Monday.

All regions experienced decreases in aggregate deal value, with North America plummeting from $100 billion in the fourth quarter to $28 billion.

Asia’s deal value fell from $17.1 billion to $4.5 billion, and Europe’s from $14.9 billion to $10.4 billion.

“Global private equity-backed buyout deal activity slowed noticeably in the first quarter of 2016, especially when compared to the record aggregate values seen in 2015,” Preqin’s head of private equity products, Christopher Elvin, said in a statement.

“With public equity markets weaker than they have been in recent quarters, it is unsurprising that fund managers are exercising caution and the pace of acquisitions, particularly large-cap deals worth more than $1 billion, has reduced.”

The private equity buyout-backed exit market also contracted in the first quarter, Preqin reported, with 343 exits announced globally totaling $62 billion. This compared with 421 exits in the previous quarter worth $72 billion.

Aggregate buyout exit value has now fallen for three consecutive quarters after hitting its most recent peak of $125 billion in last year’s second quarter, according to Preqin.

Deal and Exit Facts

Preqin reported that leveraged buyouts accounted for 41% of global buyout-backed deals in the first quarter, while mergers and add-ons represented 46% of aggregate deal value.

Fifty-nine percent of buyout-backed deals in the first quarter were worth less than $100 million, up six percentage points from the previous quarter. At the same time, buyout-backed deals worth more than $1 billion — just 7% of total deals — represented 56% of the total deal value.

Information technology deals accounted 45% of global deal value in the first quarter, up from 34% in 2015.

Sixty-three percent of the total number of private equity buyout-backed exits in the first quarter involved trade sales, including the 10 biggest ones, up from 51% the previous quarter.

The largest private equity-backed buyout deal announced in the first quarter was the $15 billion merger of ADT Security Services with ASG Security and Protection 1, owned by Apollo Global Management.

Other buyout deals announced in the first quarter, according to Preqin:

  • The Priory Group, U.K. health care company: Add-on bought from Advent International, $1.8 billion
  • Plains All American Pipeline in the U.S.: PIPE, $1.6 billion
  • The Fresh Market, U.S. retail company: Public to private, $1.4 billion
  • Airbus Defense Electronics Unit in France: buyout from Airbus, $1.3 billion
  • Opera Software in Norway: Public to private, $1.2 billion
  • Apollo Education Group in the U.S.: Public to private, $1.1 billion
  • Krausmaffei, German manufacturer: Buyout from Onex Corp, $1.1 billion
  • Netsmart Technologies, U.S. health care IT company: Merger with Genstar Capital Partners, $950 million
  • Doc Generici, Italian pharmaceutical company: buyout from Charterhouse Capital Partners, $740 million

Following are other first quarter exit deals, all of which were trade sales:

  • Brakes, U.K. food company acquired by Sysco: $3.1 billion
  • Dell, U.S. computer services company acquired by NTT Data Corp: $3.1 billion
  • Sage Products, U.S. health care company acquired by Stryker Corp: $2.8 billion
  • Truven Health Analytics, U.S. health care IT company acquired by IBM: $2.6 billion
  • Transfirst, U.S. financial services firm acquired by TSYS: $2.4 billion
  • Tumi, U.S. retail company acquired by Samsonite: $1.8 billion
  • Carefree Communities, U.S. property company acquired by Sun Communities: $1.7 billion
  • Nexeo Solutions, U.S. industrial company acquired by WL Ross Holding Corp: $1.6 billion

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