Preqin’s quarterly deal flow data shows Q1 2011 exit activity matched record levels set in Q4 2010, while the number and value of new deals fell; 623 PE-backed deals worth $49.9bn were announced, a decrease of 8% in number and 26% in aggregate value from Q4 2010.
Q1 2010 Deal Flow Facts:
- The largest buyout was announced in February: a $3.2bn take-private of Emergency Medical Services by Clayton Dubilier & Rice.
- Deal value in Q1 2011 is 26% below that of Q4 2010, but 72% higher than during Q1 2010 when 470 deals valued at $29bn were completed.
- North American deals were worth $22.6bn, 41% less than during Q4 2010 ($38.3bn). This is due largely to a lack of large and mega buyout activity.
- European deal value dropped slightly from $19.7bn in Q4 2010 to $17bn in Q1 2011.
- The value of deals announced in Asia and Rest of World increased from $8.9bn in Q4 2010 to $10.3bn in Q1 2011.
- The number of deals announced in Q1 2011 has remained consistent with the second half of 2010; small and medium-sized deal flow remains strong and there is a relative lack of larger/mega deals.
- Leveraged buyout deals accounted for 60% of aggregate value and just over 40% of the number of deals that took place globally in Q1 2011.
- 6% of completed deals were worth over $1bn, accounting for 40% of aggregate value.
- Deal flow was again highest in the industrials sector, accounting for over a quarter of all buyout deals announced and almost a fifth of the aggregate value.
- 65 secondary buyouts totaling $10.9bn were announced, a similar level to that in 2010.
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Comment:
“Private equity-backed exits continued at close to record levels in Q1 2011 as fund managers begin to realize some of the mega-sized investments made during the buyout boom-era, such as the multi-billion dollar deals at HCA and Kinder Morgan. With fund managers focusing on exits, there was a 26% fall in global deal value from the previous quarter. This was not due to a general slow-down in global deal activity – Q1 2011 is only surpassed by Q4 2010 in terms of deal volume since the onset of the financial crisis – but more because of the lack of large and mega buyout activity.
Buyout dry powder remains at relatively high levels - $412bn worldwide. With 46% of all dry powder being held by mega-buyout firms, it is likely that we will see more large deals in the coming months, especially amongst those firms reaching the end of their investment periods.”
Manuel Carvalho, Manager - Private Equity Deals