In January 2014, Preqin’s Buyout Deals Analyst recorded 217 private equity-backed buyout deals with an aggregate deal value of $18.4bn.
Analyzing January 2014 by value bands, transactions with a value of less than $100mn contributed 43% of all reported private equity-backed buyout deals, providing 4% of the aggregate deal value. This represents a decrease from the trend seen in 2013, in which deals under $100mn accounted for 57% of all deals and 6% of the aggregate deal value. On the other hand, January 2014’s large cap deals (those valued at or over $1bn) have accounted for 11% of all private equity-backed buyout deals with a 58% contribution to the aggregate deal value. Illustrating a rise of five percentage points compared to the proportion of number of deals that large cap investments accounted for in 2013, and matching the proportion, at 58%, of the aggregate deal value of such deals last year.
January 2014’s largest transaction was the buyout of Johnson & Johnson’s Ortho Clinical Diagnostics unit, which entered into a definitive agreement to be acquired by Carlyle Group for $4.15bn. Following this was Kohlberg Kravis Roberts’s acquisition of Sedgwick CMS., from Hellman & Friedman and Stone Point Capital for a notable $2.4bn.
Leveraged buyout investments, such as Johnson & Johnson’s Ortho Diagnostics Unit, and Sedgwick CMS., accounted for 35% of all private equity-backed buyout deals in January 2014; and provided 62% of aggregate deal value, an increase from the 43% seen in 2013. Add-on deals accounted for a slightly higher proportion of the number of deals, with 36% of all deals coming from strategic purchases by private equity firms to bolster an existing portfolio company, and contributing nearly a quarter (24%) of the aggregate value of all private equity-backed deals. This large number of add-on transactions and their significant aggregate value is a reflection of the importance that many fund managers are consolidating and strengthening their current portfolio companies.
In regards to the regional breakdown of private equity-backed investments announced in January 2014, North America accounted for 64% of all private equity-backed buyout deals with an aggregate value of $13.3bn or 72% of total deal value, a slightly higher figure than the 63% contribution in 2013. Europe followed, with a 27% contribution to the number of private equity-backed buyout deals and 22% of aggregate deal value.
In terms of industry prominence, 20% of the total number of deals were in the industrials sector, a long running trend seen through previous years, including 2013, when the industrial sector accounted for 23% of all private equity-backed buyout deals. As for aggregate value, healthcare contributed the most: 27% of total deal size in January 2014, largely due to the $4.2bn buyout of Johnson & Johnson’s Ortho Clinical Diagnostics unit. Parallel to the significance of healthcare is business services, the sector contributed a mere $130,400 less than healthcare, at $4.7bn aggregate deal value in January 2014, with two large cap buyouts (Sedgwick CMS, Caixa Seguros e Saúde) together providing $3.4bn towards the total.