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Private equity-backed buyout deal flow has strongest quarter since financial crisis

Private equity-backed deals announced in Q3 2010 have an aggregate value of USD66.7bn, an increase of nearly one-third on the previous quarter.

Preqin’s quarterly deal flow data shows a total of 515 private equity buyout deals announced in Q3 2010, with an aggregate value of USD66.7bn.

This represents a 29 per cent increase in the aggregate value from Q2 2010, when 498 deals were announced with an aggregate value of USD51.9bn, and a 147 per cent increase on the 396 deals valued at USD27bn reported in Q1 2010.

Deal flow in Q3 2010 represents the strongest quarter for buyout deals in the post-financial crisis landscape.

In Q3 2010, North American aggregate deal value increased 6.5 per cent from the previous quarter, with 249 deals valued at USD34.2bn announced in Q3 2010, up from the 233 buyouts valued at USD32bn in Q2 2010. Furthermore, Q3 2010 deal flow in North America represents a significant 165 per cent increase on the aggregate deal value seen in the region in Q1 2010, and remains higher than deal flow witnessed in the region during 2009.

European aggregate deal value increased significantly from the previous quarter, with 186 buyouts valued at USD26.3bn announced during the quarter, a 120 per cent increase from the USD12bn in deal value witnessed during Q2 2010. Notable deals in the region include the take private of UK-based Tomkins by Onex and CPP Investment Board for USD5bn, and the announced acquisition of Switzerland-based Sunrise Communications by CVC Capital Partners from PE-backed TDC A/S for CHF 3.3bn.

While deal flow in Asia and rest of world has seen a slight decrease from the previous quarter, it has continued to remain above the levels seen in the previous year, with 80 deals valued at USD6.2bn announced in the region, a 62 per cent increase from the USD3.8bn reported a year earlier in Q3 2009.

Almost half of all deals announced globally in Q3 2010 were leveraged buyouts, and such deals accounted for nearly two-thirds of the aggregate deal value worldwide during the quarter.

Growth capital investments accounted for 23 per cent of all deals completed in Q3 2010, and add-on deals made up 20 per cent of all private equity buyout-backed investments.

Buyouts valued at over USD1bn accounted for 60 per cent of global aggregate deal value of deals in Q3 2010, and public-to-private  deals accounted for 23 per cent.

Manuel Carvalho, managing analyst – buyout deals at Preqin, says: “Global private equity deal flow has witnessed a continued resurgence in Q3 2010, surpassing deal flow levels seen during the previous quarter, and therefore representing the strongest quarter for buyouts deals in the post-financial crisis era. In particular, this quarter has been notable for a surge in European deals, with European deal flow in Q3 2010 more than double that witnessed during the previous quarter. In addition, there has been a continued surge in secondary buyouts globally during Q3 2010, with USD26.8bn of secondary buyouts announced during the quarter, and USD41.1bn in the year to date – more than four times the value of secondary buyouts seen during the whole of 2009.”

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