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Small-Cap Private Equity-Backed Buyout Deals – October 2013

by Jessica Hull

  • 10 Oct 2013
  • PE

2012 witnessed the highest number of small-cap private equity-backed buyout deals (those valued less than $250mn) of any year, in the time period 2006 – present. In 2012, there were 781 buyouts valued at $48.8bn, and was second only to 2007 in regards to value. So far this year, the number of small-cap buyout deals has remained buoyant with 527 deals valued at $30.2bn. These figures speculate that 2013 is likely to be another year of a high number and aggregate value of small-cap buyout deals, but perhaps less than the previous year, due to a greater credit availability potentially allowing for a greater ease of financing for mid-market and large-cap deals.

Interestingly, the average size of these small-cap buyout deals from 2010 to 2013 YTD has seen a gradual downward trend. There were 655 small-cap private equity-backed buyout deals in 2010 with an average deal size of $67.5mn, whereas this year’s average deal size currently stands at $57.3mn. In fact, in the period from 2006 – present, 2013 YTD has witnessed the lowest average deal size of any year in regards to small-cap private equity-backed buyout deals.  Of the 527 small-cap private equity-backed buyout deals in 2013 YTD, 78% of these were valued at less than $100mn, the highest proportion of small-cap buyouts in the period from 2006 – 2013 YTD of this value band.

In both 2012 and 2013, Europe witnessed the highest number of small-cap private equity-backed buyout deals of any region, exceeding North America, Asia and all other economies outside these three regions. In 2012, 35% of all small-cap private equity-backed buyout deals took place in Europe and this proportion has increased to 38% so far this year. Inversely, North America’s proportion of small-cap buyouts has decreased from 34% of the number of deals in 2012 to 31% in 2013 YTD. Europe is likely to have experienced an increased proportion of small-cap private equity-backed buyout deals, as credit availability for larger value deals may be sparser here than in other regions, notably more so than in North America.

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