Q4 2019 Unquote Private Equity Barometer reveals highest ever annual deal volume

Private equity investors completed 807 deals in Q4 2019, slightly down on the previous quarter, but still the second highest in the last decade, according to the Q4 2019 Unquote Private Equity Barometer, produced in association with Aberdeen Standard Investments.

A substantial amount of capital was deployed in the last three months of the year, with quarterly deal value posting its third highest figure of the last decade at EUR67.6 billion.

On the back of three exceptionally strong quarters in succession, private equity activity in 2019 broke new ground, with total deal volume and value reaching all-time annual records.

The number of European buyouts in Q4 dropped 10 per cent to 286, but remained the second highest level in the 10-quarter period, while buyout value rose modestly on Q3 to EUR55.5 billion, posting its highest figure since Q1 2018.

In annual terms, buyout volume grew by 3.6 per cent to 1,119 deals, posting its highest figure in the last decade while the total value of completed buyouts in 2019 was EUR200.9 billion, slightly down on the previous year, though it remains strong compared with the average annual figure over the last decade.

Mid-cap volume dropped 41 per cent to its lowest in the last 10 quarters, with 48 deals, while mid-cap value fell by almost half to EUR13.1 billion, posting its lowest figure since Q 2018.

Large-cap volume, a typically volatile figure, rose to 14 from nine. The value was significantly up in Q4, reaching the second highest figure in the last 10 quarters.

The small-cap buyout market meanwhile, saw little change in both volume and value in Q4, staying in line with the previous quarter’s figures.

Deal volume in technology businesses has been rising steadily over the last 10 quarters, with deal value doubling on Q3 to EUR18.5 billion.

In terms of deal sourcing, the number of secondary buyouts and carve-outs returned to normal levels after a spike in Q3.

Regionally, the French buyout market was notably down in both volume and value (50 investments worth EUR5 billion), settling to a more normal level from the previous quarter’s high of 79 deals valued EUR12.7 billion.

CEE had a strong quarter with 16 investments worth EUR575 million, with both volume and value significantly up on the previous quarter.

The UK & Ireland was top in both volume and value with 58 deals worth EUR23.6 billion. UK value was boosted by the signing of several EUR1 billion-plus mega-buyouts, including  Merlin Entertainments (valued at EUR6.6 billion), Sophos (EUR3.6 billion) and LGC (EUR3.5 billion).
Merrick McKay, Head of European Private Equity, Aberdeen Standard Investments, says: “The key findings are consistent with activity we see from our underlying managers and funds. The European private equity market has maintained high levels of investment activity, with total deal volume (2,960) and value (EUR246 billion) in Q4 being an all-time annual record. The quarter saw a slight weakening in buyout volume, but value increased due to the signing of six EUR1 billion+ mega-buyouts, of which three were UK-based. Growth/expansion capital activity was very strong in Q4 and 2019 overall, although early-stage investment activity fell slightly over that in 2018.
“With record levels of dry powder available for new private equity investments, we expect continued high levels of European investment activity, although a pause or slowdown due to exogenous factors can never be dismissed.”