PitchBook PE Breakdown 3Q2010
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877-267-5593 [email protected] www.pitchbook.com [ 1 ] Private Equity: Data | News | Analysis Breakdown 3Q 2010 Total Private Equity Deal Flow There were 655 completed U.S. private equity deals, totaling $48 billion, during 1H 2010. 2Q 2010 deal flow rose 4% from 2Q 2009 and total invested capital rose by 328%. PE investment during 1H 2010 was less than half of what it was at the peak in 1H 2007. During the first half of 2010, U.S. private equity investment, exit and fundraising acvity all increased, pung private equity on the path to recovery from its lows a year ago. For the first half of 2010, there were 655 completed PE deals, totaling over $48 billion, an improvement over both 2H 2009 and 1H 2009, but sll far from the levels seen during the years before the credit crisis. During the second quarter, over $30 billion was invested by private equity investors in 295 PE deals, a decrease in deal flow of 18% from 1Q 2010 but an increase of $12 billion in capital invested. The middle-market ($50 million to $1 billion) connues to repre- sent the majority of private equity investment, accounng for over half of the deals so far in 2010. One interesng trend develop- ing in the middle market is an increase in larger deals and a falloff in smaller deals. Those between $500 million and $1 billion doubled their share of deal flow from an average of 4.5% to almost 11% so far in 2010. Small-cap and lower middle-market deals dropped during 1H 2010 to about 41% of PE deal flow, compared to 60% in 2009 and a long term average of 52%. A number of posive trends that began last quarter connued during the second quarter, including an encouraging rise in valua- ons and deal amounts. The median private equity investment jumped from $50 million last quarter to $120 million this quarter, driven by a returning appete for larger deals coupled with the increased availability of debt. One trend that limited partners and PE firms themselves are certainly happy to see is the fiſth straight quarter-over-quarter increase in exit deals. There were 100 completed during the quarter, the most since 3Q 2008, generang over $25 billion in total proceeds. The first half of 2010 laid down a solid foundaon of deal flow and exit acvity for investors to build upon through the second half of the year as the indus- try works through its current $400 billion capital overhang and porolios of mature investments. The Private Equity Source: PitchBook
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Transcript of PitchBook PE Breakdown 3Q2010
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Private Equity: Data | News | Analysis
Breakdown 3Q 2010
Total Private Equity Deal Flow
There were 655 completed U.S. private equity deals, totaling $48 billion, during 1H 2010.2Q 2010 deal flow rose 4% from 2Q 2009 and total invested capital rose by 328%.PE investment during 1H 2010 was less than half of what it was at the peak in 1H 2007.
During the first half of 2010, U.S. private equity investment, exit and fundraising activity all increased, putting private equity on the path to recovery from its lows a year ago. For the first half of 2010, there were 655 completed PE deals, totaling over $48 billion, an improvement over both 2H 2009 and 1H 2009, but still far from the levels seen during the years before the credit crisis. During the second quarter, over $30 billion was invested by private equity investors in 295 PE deals, a decrease in deal flow of 18% from 1Q 2010 but an increase of $12 billion in capital invested. The middle-market ($50 million to $1 billion) continues to repre-sent the majority of private equity investment, accounting for over half of the deals so far in 2010. One interesting trend develop-ing in the middle market is an increase in larger deals and a falloff in smaller deals. Those between $500 million and $1 billion doubled their share of deal flow from an average of 4.5% to almost 11% so far in 2010. Small-cap and lower middle-market deals dropped during 1H 2010 to about 41% of PE deal flow, compared to 60% in 2009 and a long term average of 52%.
A number of positive trends that began last quarter continued during the second quarter, including an encouraging rise in valua-tions and deal amounts. The median private equity investment jumped from $50 million last quarter to $120 million this quarter, driven by a returning appetite for larger deals coupled with the increased availability of debt. One trend that limited partners and PE firms themselves are certainly happy to see is the fifth straight quarter-over-quarter increase in exit deals. There were 100 completed during the quarter, the most since 3Q 2008, generating over $25 billion in total proceeds. The first half of 2010 laid down a solid foundation of deal flow and exit activity for investors to build upon through the second half of the year as the indus-try works through its current $400 billion capital overhang and portfolios of mature investments.
The Private Equity
Source: PitchBook
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Private Equity: Data | News | Analysis
Business Products and Services continues to be the top industry for private equity investment, accounting for 31% of 2Q deal flow. Private equity investors are turning bullish on the Consumer Products and Services industry though, pushing up its portion of deal flow by 7% to represent 26% of the quarter’s investments. Materials & Resources was the only other industry that saw a gain during the quarter with the Energy industry holding steady and the rest declining.
Investments in the Midwest region jumped from 15% of deal flow in 1Q to 23% in 2Q, while activity in the Southeast dropped from 24% to 16%. For the rest of the United States, investment levels remained relatively similar to long-term averages.
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PE Transactions by Industry Sector In 2Q 2010
PE Transactions by Region In 2Q 2010
Percent of PE Transactions (Count) by Deal Size
Deals in between $50 million and $250 million saw a significant increase during 1H 2010 to account for 38% of deal flow, its highest percentage in the last seven years. Deals under $50 million, with only 85 deals in 1H 2010, represented its smallest portion of deal flow since 2003, due partially to difficulties in finding financing for smaller-sized companies.
The middle market ($50 million - $1 billion) continues to represent the majority of PE investment, accounting for $30 billion of the $48 billion invested so far this year. The upper middle-market deals between $500 million and $1 billion saw a big jump in 1H 2010 and are on pace to see the third highest amount of capital invested ever.
Percent of PE Investment (Total $ Amount) by Deal Size
*Through ²Q ²⁰¹⁰
Source: PitchBookSource: PitchBook
Source: PitchBookSource: PitchBook
Source: PitchBook Source: PitchBook
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Private Equity: Data | News | Analysis
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The second quarter of 2010 was the most active three month period for U.S. private equity exits in nearly 2 years with 100 deals and over $25 billion in proceeds. The mix of exits mirrored that of last quarter, as well as long-term averages, with about 60% being sales to strategic acquirers, 28% being sales to other private equity firms and the remaining 12% repre-senting companies going public. Exit opportunities will likely increase with companies and private equity investors holding on to record amounts of cash and the public markets once again opening up for PE-backed companies to go public.
Private Equity Exits Continue Their Upward Climb
Source: PitchBook
Selected Deals in 2Q 2010
Target Name
Dow Chemical (Styron Unit)
Michael Foods
American Tire Distributors
Sedgwick ClaimsManagement Services
TransUnion
The Hillman Group
Pattern Energy Group
Chaparral Energy
Dave & Buster's
NorTex Gas Storage
Investor Name(s)
Bain Capital
GS Capital Partners
TPG Capital
Stone Point Capital,Hellman & Friedman
Madison Dearborn Capital Partners
Oak Hill Capital Partners
Riverstone Holdings
CCMP Capital Advisors,J.P. Morgan SecuritiesOak Hill Capital Partners
Alinda Capital Partners
Deal Size*
$1,630
$1,360
$1,300
$1,100
$1,020
$815
$800
$795
$570
$505
*Values in millions
Deal Type
Buyout - LBO
Buyout - LBO
Buyout - LBO
Buyout - LBO
Buyout - LBO
Buyout - LBO
Growth/Expansion
Growth/Expansion
Buyout - LBO
Buyout - LBOSource: PitchBook
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Private Equity: Data | News | Analysis
The second quarter of 2010 saw 24 fund closings, a 9% increase over the 22 funds closed in 1Q 2010.The number of funds raised through 2Q 2010 declined 30% compared to 66 funds closed through 2Q 2009.Total capital raised through 2Q 2010 declined 56% compared to the $97 billion raised through 2Q 2009.
Fundraising Activity
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No mega funds (over $5 billion) have closed so far in 2010, but fundraising for middle-market funds has been fairly strong. This robust middle-market fundraising is likely due to investors’ current preference for funds targeting reasonably-sized deals capable of closing today. The space that is currently experiencing difficulty with fundraising is the $100 million to $250 million range with only 3 fund closings in 1H 2010.
Almost 70% of the total capital raised by U.S. PE firms during 1H 2010 was by funds in the $1 billion to $5 billion size range. At an average size of $2.5 billion, these funds are raising more money on average than they ever have in the past as limited partners shift their focuses from the mega-funds of 2007 to more reasonably-sized funds. At just over 10% of total capital raised, funds from $250 million to $500 million are also experiencing a strong 2010.
The State of Private Equity Fundraising The U.S. private equity fundraising market remains difficult, but, after a third straight quarter-over-quarter increase in fund closings, it appears to be getting back on track. During 2Q 2010, a total of 24 U.S. PE funds (buyout, distressed, growth and mezzanine) held final closes on a total of $24 billion. Almost 70% of the total capital raised by U.S. funds this year has been by funds in the $1 billion to $5 billion size range, showing that there is strong interest from LPs in these upper middle-market funds. Fundraising by mid-sized funds, those between $250 million and $1 billion, has been strong this year as well, accounting for over half of all the funds closed in 2010. The second half of 2010 will likely be strong for PE fundraising as the increase in exit volume, deal flow and valuations show that the asset class is recovering and still an attractive area for investment.
Largest Funds Closed Through 2Q 2010 Firm
Madison Dearborn PartnersAlinda Capital PartnersOaktree Capital ManagementThe Carlyle GroupAvista Capital PartnersApollo Global ManagementAdvent InternationalAngelo Gordon & CompanyThe Carlyle GroupPrudential Capital GroupStarwood Capital GroupCenterbridge PartnersThe Sterling GroupEnCap Flatrock MidstreamABRY PartnersAudax GroupLBC Credit PartnersInsight EquityResource Capital FundsLovell Minnick Partners
4,1004,0003,3002,5501,8001,7641,6501,2001,100
965965852820792750700645525500455
FundMadison Dearborn Capital Partners VIAlinda Infrastructure Fund IIOCM Principal Opportunities Fund VCarlyle Asia Partners IIIAvista Capital Partners IIApollo European Principal Finance FundAdvent Latin America Private Equity Fund VAG Capital Recovery Partners VIICarlyle Global Financial Services PartnersPrudential Capital Partners IIIStarwood Capital Global Hospitality Fund IICenterbridge Special Credit PartnersSterling Group Partners IIIEnCap Energy Infrastructure FundABRY Senior Equity IIIAudax Mezzanine Fund IIILBC Credit Partners IIInsight Equity Fund IIResource Capital Fund VLovell Minnick Equity Partners III
Size ($M)
Source: PitchBook
†See PitchBook’s ‘US PE Capital Overhang Report’ in the PitchBook Library: www.pitchbook.com/2Q_2009.html
Source: PitchBook
*Through ²Q ²⁰¹⁰
Source: PitchBook Source: PitchBook
Fund Count by Fund Size Capital Raised by Fund Size
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Private Equity: Data | News | Analysis
Top Law Firms in Private Equity1
Jones DayKirkland & EllisLatham & WatkinsShearman & Sterling Skadden, Arps, Slate, Meagher & Flom Sullivan & Cromwell Wilson Sonsini Goodrich & RosatiWillkie Farr & GallagherMorgan, Lewis & Bockius Blank Rome DLA Piper Rudnick Gray Cary
Top Investment Banks & Advisors2
Houlihan Lokey Howard & Zukin Goldman Sachs William Blair & Company Harris WilliamsMorgan StanleyPiper JaffrayLazard Middle Market Alvarez & Marsal Holdings Montgomery & Company
Top Lenders in Private Equity3
General Electric Capital Bank of America CIT Group TriState Capital Bank PNC Financial Services Group U.S. Bank LBC Credit Partners Fifth Third Bank Peninsula Capital Partners Babson Capital Partners Wells Fargo Foothill GE Antares Capital Madison Capital Funding Golub Capital NewStar Financial
By Number of Investments
Most Active Private Equity Investorsin 1H 2010
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Investor NameThe Blackstone GroupH.I.G. CapitalStone Point CapitalThe Carlyle GroupLightyear CapitalApollo Global ManagementGolden Gate CapitalSun Capital PartnersWarburg PincusAres ManagementCatterton PartnersMetalmark CapitalRiverstone HoldingsThe Riverside CompanyThoma BravoWind Point PartnersBrazos Private Equity PartnersCCMP Capital AdvisorsKayne Anderson Capital AdvisorsMarlin Equity PartnersSpire Capital PartnersVeronis Suhler StevensonAEA InvestorsAllied CapitalAmerican Industrial PartnersArsenal Capital PartnersAudax GroupBain CapitalBaird Capital PartnersBlackEagle PartnersCourt Square Capital PartnersCrestview PartnersFrancisco PartnersHellman & FriedmanLeonard Green & PartnersOak Hill Capital PartnersPlatinum EquitySilver Lake PartnersSilverhawk Capital PartnersSummit PartnersTPG CapitalWayzata Investment PartnersSource: PitchBook
Deal Count11109987777666666655555544444444444444444444
Source: PitchBook
2 by number of advisory roles in transactions
Top Investment Banks & Advisors2
Imperial CapitalGoldman SachsJefferies & CompanyHarris Williams & Co.JP MorganLazardLincoln InternationalRobert W BairdBofA Merrill LynchMoelis & Company
3 by number of financings provided
Top Lenders in Private Equity3
GE CapitalMadison Capital FundingFifth Third BankGolub CapitalAmalgamated CapitalAres CapitalBofA Merrill LynchGE Antares CapitalGoldman SachsWells Fargo
1 by counsel provided on transactions
Top Law Firms in Private Equity1
Jones DayKirkland & EllisLatham & WatkinsMorgan Lewis & BockiusWeil Gotshal & MangesSkadden Arps Slate Meagher & FlomSullivan & CromwellKaye ScholerPaul Weiss Rifkind Wharton & GarrisonRopes & Gray
Most Active Private Equity ServiceProviders in 1H 2010By Number of Deals Serviced
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Private Equity: Data | News | Analysis
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