Will elevated US PE inventory contribute to continued secondary buyout activity?

It is difficult to get a sense of just how many middle-market companies there are in the US, which is a critical statistic to have on hand when analyzing the impact of the heightened private equity inventory. According to a recent installment of the Middle Market Power Index from American Express and Dun & Bradstreet, there were 182,578 firms that had between $10 million and $999 million in revenue in 2016...

Transaction sizes suggest relative US middle-market popularity for PE

The median private equity transaction with a US middle-market company fell slightly to $134.0 million in 2016, down a mere $4 million from the prior year. Given the minuscule magnitude of the decline, it's clear that there is still plenty of competition from not only strategic acquirers in the upper end of the market but also fellow PE firms that are keeping transaction sizes relatively high, among other factors...

PE Fundraisers As Successful as Ever, Suggesting Industry’s Maturation

89% of private equity funds closed in the US last year, against a backdrop of healthy fundraising levels—252 vehicles combined for a total of $180 billion committed. This decade-high proportion of fundraising success leads one to the most evident conclusion that limited partners are still eager for exposure to the asset class. Combined with the historically strong median buyout fund size of $250 million in 2016...

US PE company inventory still poses questions

As of the end of 2016, there were 7,168 companies backed by private equity firms in the US. That represents a 46% increase over the 4,923 recorded in 2009. Even though the majority of those businesses are on the younger side in terms of when they were invested in, there is still a significant portion that has been held for over six years. Part of that is due to slowing exit activity throughout last year, but it also raises questions about portfolio company quality...

Has US add-on activity peaked?

Last year, US private equity investors added on to extant holdings so frequently that the proportion of add-ons to all buyouts hit no less than 64%. The steady increase over the past six years, and especially the rapid surge of 3% even as overall activity fell, both speak to the increasing maturation of adding on as a PE investment strategy and its relative attraction in the current environment...

First-time US PE funds make slight comeback in 2016, but still a low portion of total fundraising

First-time private equity funds in the US amassed just shy of $7.5 billion in 2016, across 26 pools of capital. Although both figures were distinct increases from 2015 - which logged 17 first-time PE funds and $4.6 billion raised - as a proportion of total US PE fundraising, first-time fundraising activity still remains at a considerable low relative to earlier in the past decade...

What is in store for US private equity in 2017?

After a high-water mark for US private equity activity in 2015, last year experienced a significant slowing in not only the number of closed deals but also total deal value, the latter ameliorated by a bevy of blockbuster transactions. This was driven in part by the progression of a typical investment cycle, wherein after a steady ramp-up in dealmaking the market attracts more and more firms looking to cut deals and consequently becomes pricier...

PE outperformance to persist?

Only two private equity fund vintages are still underperforming relative to public indices, net of all fees, as calculated by PitchBook using the Russell 3000 Index. Funds in those particular vintages can safely be assumed to be overly impacted by the global financial crisis, while the significant outperformance of funds from vintages prior to the boom times of 2006 and 2007 can also be chalked up to a highly fervid dealmaking environment...

US PE firms dial down their pace of investing in Canadian startups

In 2015, no fewer than 159 private equity firms with headquarters in the US cut a deal with a Canadian company, a clear high for the decade. That pace has slowed considerably even as general Canadian PE activity has declined, with 105 firms active within the country through the end of October. The drivers of the decline are likely the same as in the US: a lack of quality targets given the surge in buying over the last couple of years, competition, and a surplus of dry powder contributing to loftier prices...

How long will recent PE fund vintages keep returning at a fast clip?

One of the ongoing narratives presented by recent private equity fund returns data has been the recovery of vintages most impacted by the recession. As is evidenced by the chart above, the average distributions-to-paid-in multiple of 2007 and 2008 vintages have benefited considerably from the past few years’ selling frenzy, with a high-priced M&A ...