Private Equity-Backed Buyouts in Q3 2011

by Jonathan Parker

  • 06 Oct 2011
  • PE

The third quarter of 2011 saw a decline in activity in the private equity-backed buyout industry, mirroring the general malaise in the global economy. The volume of deals fell 7.5% on the Q2 figure, whilst the aggregate value fell by over 20%. Unsurprisingly, the fall in the global value of buyouts was led by a decline in investment in Europe, with the total value of buyouts in the region standing around 30% lower in Q3 than in Q2 2011. The aggregate value of deals in the US was nearly 25% lower than in Q2 2011, although Asia and Rest of World received over 15% more investment in Q3 than in Q2.

Despite the global decline in Q3, this year remains on course to register the highest annual number and value of deals in the post-Lehman era, and activity in the quarter eclipsed that of Q1 2009, when fewer than 350 deals were completed with an aggregate value of just over $11 billion. Also, the number of private equity-backed buyouts in the third quarter was 4% higher than in Q1 2011, with 7% greater aggregate value. Although the aggregate value of buyouts is still far below the boom-era peak of $270 billion in Q2 2007, the volume of deals has been somewhat more resilient, with over 680 deals in Q3 2011 compared to 900 completed in Q2 2007. This indicates that the appetite for investment remains strong, even if the average value of transactions has fallen significantly in the absence of the mega-market deals seen in the boom-era.

The largest buyout deal in the third quarter was the public to private acquisition of Kinetic Concepts, Inc., a US-based healthcare company. Apax Partners, CPP Investment Board and Public Sector Pension Investment Board announced in July that they had entered into a definitive agreement to acquire the company in a deal valued at $6.3 billion.

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