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Was 2011 a Boom Year for PE? Just The Facts…

by

December 23, 2011

This year was meant to be a rebound year for private equity. Has it been? , asks Factset. The answer, according to its latest ediorial, is no it has not rebounded as expected although the figures improved slightly over 2010 in terms of value, as the graphic shows. The numbers show the industry is still a long way off the boom years prior to the onset of the debt crisis in late 2008.

Key points

– The first half of 2011, activity for both volume and value exceeded 2010 totals, with 533 announced transactions and $53.9 billion in transactions for 2011 compared to 339 transactions and $29.4 billion in transactions for the year prior.

– But the industry is still a long way from the boom year of 2007 with $745 billion in transaction value and nearly 25% of all U.S. activity.

– During the first quarter o 2010, activity resembled that of the boom years. January topped the year in volume, with 120 transactions, and while the figure dropped for the months in the rest of the quarter, deal values reached $14 billion in February.

– During the second quarter, May represented the highest volume in activity, reaching 99 announced transactions, while the month also topped out at $9.7 billion in transactions.

– The rebound stemmed from the considerable amounts of cash held by private equity participants who were waiting to be deployed, as firms looked to make additional bolt-on acquisitions to their earlier investments.

– Exit deals were also on the increase strategic buyers as well as secondary buy-outs made acquisitions.

– Through the third quarter, deal activity dipped to 257 transactions., More indicative of the markets, value totals dropped to its lowest figures of the year to $4.2 billion in September.

– But fourth quarter is down. T ransactions announced in November bottomed out for the year, at just 66. Through the first two months of the fourth quarter, activity has reached 154 transactions, its second lowest two month output for the year.

 

Factset is a research service whose articles do a good job of cutting cut through the noise and chatter to provide some real and often surprising numbers. Recent articles worth reading include From News Corp to national crises, don’t judge market volatility by the headlines and If it’s not another recession, might it be the apocalypse? (Part 1).

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