Global Private Equity-Backed Secondary Buyouts, 2006-2013 YTD – May 2013

by Jessica Hull

  • 16 May 2013
  • PE

Leveraged buyout deals in which a private equity-owned company is sold to another private equity firm are known as secondary buyouts, or sponsor-to-sponsor deals. Preqin's Buyout Deals Analyst shows that 2012 was a record year for private equity-backed secondary buyouts in terms of the number of deals in the period 2006 to present. Additionally, 2012 witnessed the highest aggregate deal value obtained from secondary buyout transactions since 2006, only surpassed by 2007, where 336 private equity-backed secondary buyouts were valued at $94bn.

So far this year, 107 secondary buyouts have taken place globally with an aggregate value of $19bn. Forty-six percent of these transactions have taken place in Europe, where three-quarters of the aggregate global deal value has been attained. Of the 49 secondary buyout deals that have taken place in Europe this year, five large-cap secondary buyouts (those valued over $1bn) have contributed 65% of the overall aggregate deal value for the region. These notable deals, which also feature in the top five secondary buyouts globally this year, include the announcement of the €3.1bn acquisition of ista by CVC Capital Partner from Charterhouse Capital Partners, as well as the €1.13bn secondary buyout of Cerved by CVC Capital Partners from Bain Capital and Clessidra Capital Partners.

Secondary buyout transactions have accounted for an increasing proportion of the aggregate value of private equity-backed buyout deals almost year-on-year in the period 2006 to 2012. Last year, 12% of global private equity buyout deals were secondary buyout transactions, accounting for 30% of overall aggregate deal value. So far this year, only 16% of the global aggregate deal value has been obtained from secondary buyout transactions, which as a proportion of the total is largely skewed by the announcement of the privatizations of Dell and Heinz which together contribute 43% of global aggregate deal value. Without the inclusion of these two private equity-backed buyouts, secondary buyout deals this year account for 11% and 28% of the number and aggregate value of deals, respectively. A turbulent public equity market in recent years has made private equity exits via the public market through initial public offerings and follow-on share offerings more difficult. Secondary buyout transactions have therefore gained traction as fund managers are increasingly under pressure to provide returns to LPs, while also deploying the large amount of dry powder at their disposal.

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