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Alternatives in 2019: A Bumper Year for Private Equity Buyout Deals in 2018 – Will it Continue?

by William Clarke

  • 24 Jan 2019
  • PE

2018 has continued the strong deal making seen in 2017,  even surpassing it to become the most active year the industry has ever recorded. A total of 5,106 private equity-backed buyout deals were announced through the year, an all-time record, building on the previous record of 4,829 seen in 2017 in the chart below. The total value of these deals also rose to reach $456bn – this is close to the $460bn seen in 2015, and may surpass it given that Preqin expects these figures to rise by up to 5% as more information becomes available.

Nonetheless, 2018 remains some way off the all-time record deal values seen immediately prior to the Global Financial Crisis: 2007 recorded $700bn in deal making from 3,877 deals. 

Key private equity-backed buyout deals and facts:

  • There were 5,106 private equity-backed buyout deals announced in 2018, an all-time high. This surpasses the previous record of 4,829 deals seen in 2017.
  • Deals announced in 2018 had a combined deal value of $456bn, the second-highest total since the Global Financial Crisis. It remains some way off the $700bn in deals recorded in 2007, though.
  • North America saw 2,787 deals announced worth a total of $264bn, while Europe saw 1,779 deals worth an aggregate $137bn.
  • Add-ons accounted for 42% of the number of deals in 2018, as firms acquired additions to their existing assets. The 54 public-to-private deals announced in the year accounted for 17% of deal value, despite representing just 1% of deals.
  • Deal activity was diversified: industrials and information technology accounted for 14% and 15% of deal value respectively, while healthcare (13%), telecoms (12%) and business services (12%) all represented substantial portions of deal value.
  • Buyout-backed exit activity was also strong, remaining broadly on par with 2017. 2018 saw 1,958 exits announced worth a combined $326bn, compared to 1,977 exits worth $297bn the previous year.
  • Trade sales accounted for 58% of the number of exits and of exit value. Sales to GPs, also known as secondary buyouts, accounted for almost a third (31%) of the number of exits.
  • The largest deal of the year was the $21bn formation of Keurig Dr Pepper, Inc. in January 2018. The largest exit was the $8.3bn sale of BMC Software, Inc. to KKR, which was also the sixth largest acquisition of 2018.

 Preqin’s Christopher Elvin, Head of Private Equity, commented: “If 2017 was a year marked by record levels of fundraising, then 2018 was a year marked by record levels of deal making. With dry powder breaking the $1tn barrier in 2017, some feared that there was too much available capital that might overheat the market and deter deal making. In fact, we have seen the opposite occur, but some doubt remains: dry powder has kept climbing to $1.2tn, and fund managers and investors both still say that asset pricing is a concern. However, strong activity in 2018 may dampen these concerns, and 2019 seems poised to see deal activity climb further rather than slackening.”

The 2019 Preqin Private Equity & Venture Capital Report is due for release soon, which contains more detailed deals and exits data, as well as comprehensive data on fund managers, fundraising, investors, performance and much more. In the meantime, please take a look at our 2018 Private Equity-Backed Buyout Deals and Exits Update  or browse Insights for more of our recent research. 

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