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Global Private Equity-Backed Buyout Deals by Value Band – June 2013

by Jessica Hull

  • 06 Jun 2013
  • PE

In 2013 YTD, small-cap private equity-backed buyout deals (those valued at less than $250mn) continued to make up the majority of deal-flow globally, with 77% of all global buyout deals falling within this value band and accounting for 11% of aggregate deal value. Mid-market private equity-backed buyout deals (those valued at $250-999mn) represented 18% of the number of deals globally and contributed 23% of the aggregate deal value, so far this year. In this same time period, the proportion of the number of deals valued at $1bn or more was 5%, accounting for 66% of the aggregate deal value.

2012 was a record year for the number of small-cap deals in the time period from 2006 to 2012, with 762 deals valued at $47.7bn, in comparison to 2011, in which 729 small-cap deals were announced with an aggregate value of $45.5bn. In 2006 and 2007, small-cap deals accounted on average for 67% of all deals globally, in contrast to the last three years in which deals of this value band have accounted on average for 76% of all deals. This rise in the proportion of small-cap deals since the onset of the global financial crisis has been coupled with the inverse effect in relation to the proportion of the number of large-cap deals (those valued at $1bn or more). In the height of the buyout boom-era, large-cap deals accounted for 13-14% of deal-flow, whereas in the period 2010 – 2012, large-cap deals fell to account for 6-7% of the number of private equity-backed buyout deals.

The move to a higher proportion of smaller-cap deals and the drop in the number of large-cap deals can be attributed to a variety of reasons, including a greatly reduced availability of credit required for large leveraged buyout transactions, especially for those buyout fund managers that take substantial public companies private.  A drop in investor sentiment and continued market turmoil due to the prevalence of the European sovereign debt crisis have also been reasons for the changing face of buyout deals by value band over the last few years. However, with the opening weeks of 2013 witnessing the announcement of the two largest private equity-backed buyout deals since the onset of the global financial crisis; the $24.4bn Silver Lake-backed privatization of Dell Inc. and the $28bn Berkshire Hathaway and 3G Capital-backed buyout of H.J. Heinz Company, this could give rise to a gradual move back to a greater proportion of large-cap deals seen globally.

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