The Increase in Prominence of Large Cap Private Equity-Backed Buyout Deals – October 2015

by Kedian Lamin

  • 27 Oct 2015
  • PE

In the wake of the recently announced acquisition of EMC by Dell, Inc., MSD Capital, Silver Lake and Temasek for $67bn – the largest private equity-backed deal on record – Preqin examines the growing prominence of large cap buyout deals in the private equity industry. Large cap transactions (private equity-backed investments worth $1bn or more) have played a major role in the history of private equity investments. Preqin’s Buyout Deals Analyst online service has recorded 740 large cap deals totalling $2.2tn since 2006*.

In 2007, large cap transactions accounted for 12% of the total number of private equity-backed buyout deals, with a record aggregate value of $526bn. This is in sharp contrast with the levels recorded during the peak of the global economic recession in 2009, when only 19 large cap transactions took place (3% of the total number of deals), totalling $45bn. The downward trend was reversed in 2010, when the number of large cap transactions increased to 54 (5% of the total number), while the aggregate size of such deals increased to $107bn (15% of the global aggregate value). 2014 witnessed the highest levels of large cap activity since the financial crash, with 77 large cap transactions totalling $182bn, 8% of the number of all private equity-backed buyout deals and 23% of the aggregate value.

So far this year*, Preqin’s Buyout Deals Analyst has recorded 64 large cap transactions valued at a total of $265bn, meaning that the aggregate value of such deals has already surpassed the total value of large cap deals in the whole of 2014. A comparison of the first three quarters of 2014 and 2015 paints an even more positive picture. There were 57 large cap deals globally valued at an aggregate $135bn during Q1-Q3 2014, while the corresponding period this year recorded 62 such deals valued at a total of $197bn. Furthermore, at 10%, the number of large cap deals as a proportion of all private equity-backed deals in 2015 YTD is at its highest since 2007.

North America has hosted the majority of large cap transactions since 2006; 53% of the 740 large cap transactions registered since 2006 took place in North America, accounting for 65% of total global deal value. Since the beginning of 2015, North America continues to host more large cap transactions than any other region, with a 52% market share. Europe trails with 33%, despite a four percentage point increase from 2014, while Asia ranks third with 13%. North America dominates the rest of the world by a significant margin in terms of aggregate deal value, with a record market share of 72% in 2015 YTD, representing an 11 percentage point increase from 2014.

*Data as at 14 Oct 2015; Analysis is based on the transactions where the deal value was disclosed.

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