The US has historically been the main hub for private equity activity, and H1 2015 witnessed the highest semi-annual aggregate value ($112bn) of private equity-backed deals in the US since H1 2007. Preqin’s Buyout Deals Analyst shows that since 2006 there have been a total of 14,851 private equity-backed transactions in the US valued at an aggregate $1.8tn. These transactions represent 47% of all private equity-backed buyout deals globally since 2006 in terms of the number of deals and 55% in terms of the total value.
As shown in the chart below, buyout deals in the US accounted for between 43% and 50% of the global total for the period 2006 to 2014. The number of deals in 2015 YTD accounts for 54% of all private equity-backed deals globally, the largest proportion on record. Furthermore, US private equity deals in 2015 YTD account for 56% of the global total in regards to aggregate deal value, a significant increase on the 48% seen in 2014 as a whole.
When looking at state-level data for the number of deals as a proportion of all US buyout transactions since 2006, the top five states are California (13%), Texas (11%), New York (7%), Florida (6%) and Illinois (5%). In terms of aggregate value, deals in Texas again account for the largest proportion (16%) since 2006, followed by California (9%), Pennsylvania (8%), New York (8%) and Illinois (6%). Unsurprisingly, private equity deals within the energy & utilities sector make up the largest proportion of transactions in Texas for both aggregate value (47%) and number of deals (26%). In California, on the other hand, information technology represents the largest proportion (26%) of deal value, with the industrials sector witnessing the highest number of investments in the state. Private equity-backed buyout deals in the industrials sector have also been the most numerous on a national level too, accounting for 27% of all US deals since 2006.
Analysis of private equity-backed investments in the US by deal type clearly shows that in recent years there has been a marked shift in the US market in favour of add-on (including mergers) transactions. Such deals accounted for just 27% of all private equity-backed buyout deals in the US in 2006, but their market share has steadily grown to 45% in 2015 YTD. Conversely, leveraged buyout (LBO) deals accounted for half of all US private equity-backed deals in 2006, but have accounted for under a third (31%) of the total so far in 2015.
Nonetheless, the breakdown of private equity-backed buyout deals by value reveals encouraging figures. Large cap deals ($1bn+) have accounted for 16% of all US deals so far this year in terms of number; a level not seen since 2007. Mid-cap transactions ($250-999mn) have also grown in prominence and account for 34% of all US deals in 2015 YTD, compared with just 18% in 2009. These trends show that as market and credit conditions remain somewhat challenging, fund managers are increasingly turning to mid-sized opportunities as well as add-on deals to consolidate and strengthen their current portfolio companies.