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PE-backed buyout deals and exits rebound deal flow increases 37 per cent

There were 705 private equity-backed buyout deals in Q2 2012, valued at an aggregate USD60.4bn – a 37 per cent increase in deal value from Q1 2012, and a six per cent increase from the USD56.8bn in Q4 2011, according to figures from Preqin.


There were 705 private equity-backed buyout deals in Q2 2012, valued at an aggregate USD60.4bn – a 37 per cent increase in deal value from Q1 2012, and a six per cent increase from the USD56.8bn in Q4 2011, according to figures from Preqin.

In addition, 293 private equity-backed exits were announced in Q2 2012, with an aggregate value of USD77.7bn – a significant rise from the USD47.2bn in exit value seen in the previous quarter.

The 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.

Despite the increase in Q2 2012, private equity-backed deal flow for H1 2012 stands at USD104.4bn, down 25 per cent from H1 2011.

North America witnessed 369 buyouts valued at USD32.8bn in Q2 2012, a 44 per cent increase in deal value from the previous quarter, making the region once again the most prominent area for PE-backed buyouts globally.

European deal flow increased by 33 per cent to USD16.9bn during Q2 2012, from USD12.7bn in Q1 2012; however, deal flow in the region remains significantly below the average of USD24bn in deals per quarter during 2011.

Deal flow in Asia and Rest of World climbed by 25 per cent to USD10.7bn in Q2 2012 from the Q1 total, nearing the post- Lehman high of USD11bn in Q1 2011.

Forty four per cent 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. One-third were add-on deals, while public-to-private deals represented 8 per cent of the number and 20 per cent of the aggregate value of all deals during Q2 2012.

Over half of all deals in Q2 2012 were valued at less than USD100m, with 75 per cent of deals falling into the small-cap bracket of less than USD250m. Mid-market deals accounted for 18 per cent of the number and 32 per cent of the aggregate value of deals in the quarter. Deals valued at over USD1bn in size made up nine per cent of the total number of deals in Q2 2012. In the previous quarter, deals of this size made up just four per cent of the total.

The industrials sector was once again the most prominent area of buyout activity in relation to number of deals, with 22 per cent of all transactions in this sector.

The consumer sector represented the largest industry in relation to the value of deals, representing 29 per cent of deal value. Three of the 10 largest buyout deals announced occurred in the sector, including the largest of the quarter – the USD2.69bn recap of Party City Corporation by Thomas H Lee Partners.

“During Q2 2012, we have witnessed a surge in both PE-backed buyout and exit activity in comparison to the previous quarter, with USD60.4bn in deals and USD77.7bn in exits announced during the quarter – a significant 37 per cent and 65 per cent rise in deals and exits respectively, in comparison to the weak deals data reported in Q1 2012,” says Manuel Carvalho, manager – private equity deals. “These Q2 2012 figures bring deal flow in line with the levels of activity witnessed in the second half of 2011, while exit activity reported its strongest quarter since Q2 2011.”

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