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Private Equity-Backed Exits in the US, 2006 - 2015 YTD

by Adam Jackson

  • 22 Sep 2015
  • PE

According to Preqin’s Buyout Deals Analyst, there have been several significant exits for US-based portfolio companies in 2015 YTD. Those of mention include Freescale Semiconductor, Suddenlink Communications, SunGard Data Systems Inc. and Par Pharmaceutical Companies, Inc. Freescale Semiconductor was acquired by NXP Semiconductors in a merger exit, returning $16.7bn to its investors, which included Blackstone Group, Carlyle Group, Permira and TPG. The other companies were sold via trade sales for a collective $26.3bn; these transactions have ultimately contributed to 2015 YTD having the largest average exit value on record, standing at $959mn. Since 2011, the average exit value has increased year on year from $476mn to $704mn in 2014.

Around the time of the recession, the total number of US exits decreased from 516 in 2007 to 296 in 2009. Since then, however, the aggregate value of exits in the US has increased year on year from $119bn in 2011 to $206bn in 2014. So far this year, the total exit value stands at $157bn, but with over three months remaining in the year, this could yet surpass the 2014 high.

Trade sales have long been a preferred route for investors to realize their stakes in portfolio companies. As shown in the chart above, since 2006 (except 2009) trade sale exits have accounted for the majority of exits in the US. From 2012, the average exit value of trade sales has increased, rising from $481mn to $1.1bn in 2015 YTD. This includes several multi-billion dollar exits, as previously stated, and reflects the increased confidence in the financial market since the economic crisis. The top 10 exits since 2006 have all been trade sales, accounting for an aggregate exit value of $117bn, showing the dominance that they have in the exit market.

Preqin data shows that in the US, the industrials and consumer & retail sectors were the two largest industries in terms of the total number of exits since 2006, representing 28% and 15% respectively. Exits in the industrials sector accounted for an aggregate value of $222bn, coming from 1,495 of the 5,417 exits. The real estate and telecoms & media industries have provided the highest average exit values since 2006, with real estate’s average exit value at $1.3bn, and the telecoms & media industry’s average exit value at $940mn.

In terms of location, the states of California, Texas and New York have dominated the total number of exits in the US since 2006. Collectively, they represent 30% of all US-based portfolio company exits, with 592 taking place in California, 576 in Texas and 411 in New York. These three states top the list again in terms of aggregate exit value, collectively accounting for $388bn, which represents nearly a third of the total aggregate exit value for all states in the US since 2006. Interestingly, Arkansas is the state with the highest average private equity-backed exit value since 2006 at $4.2bn, due in part to Alltel Corporation’s trade sale exit to Verizon Communications in June 2008 for $28.1bn.

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