It is not just fundraising in venture capital that has increased in recent months; dealflow in the buyout sector is on an upward course too. According to Preqin’s latest research, aggregated PE exit value grew by 65% compared to the first quarter 2012.
The actual number of deals announced during Q2 2012 has remained virtually unchanged from the previous quarter, indicating this rise in both private equity-backed buyouts and exits has resulted from an increase in large-cap activity.
The number of buyout deals also increased. (See Figure 1) There were 705 private equity-backed buyout deals in Q2 2012, totaling USD 60.4 billion, which is a 37% increase in deal value from Q1 2012, and a 6% increase from the USD 56.8 billion in Q4 2011. That was the good news.
The bad news is that despite the quarterly improvement, this year’s private equity-backed deal flow for the first half is still down 25% from the same period last year.
– European dealflow increased by 33% however, dealflow in the region remains significantly below the average value of deals per quarter during 2011.
– Dealflow in Asia and Rest of World climbed by 25% nearing the post-Lehman high achieved in Q1 2011.
– 44% of all deals in Q2 2012 were leveraged buyouts, with almost two-thirds of all capital invested in the quarter attributed to this deal type.
– The industrials sector was once again the most prominent area of buyout activity in relation to number of deals, with 22% of all transactions in this sector. (See figure 6)
– The consumer sector represented the largest industry in relation to the value of deals, representing 29% of deal value. Three of the 10 largest buyout deals announced occurred in the sector, including the largest of the quarter – the USD 2.69 billion recap of Party City Corporation by Thomas H Lee Partners.