Top Five Secondary Buyouts in 2012 (as at Q3 2012)

by Kevin Smith

  • 19 Oct 2012
  • PE

Private equity deals in which a private equity-owned company is sold to another private equity firm are known as secondary buyouts, or sponsor-to-sponsor deals. These secondary buyouts, valued at an aggregate $55.7bn, account for 30% of this year’s global aggregate deal value to date, and are set to overtake 2011 figures recorded at $62.2bn.

Secondary buyouts have risen in popularity since mid-2011, driven by key factors such as tentative public markets, an overhang of capital raised during the boom era, and pressure on private equity firms to return capital back to their investors on deals made pre-crisis.

Cequel Communications was the largest secondary buyout deal in 2012 as at Q3 2012. The Missouri-based communications provider entered into an agreement in July 2012 to be acquired by BC Partners and CPP Investment Board for $6.6bn, with a $1.98bn equity cheque. Selling shareholders include Charterhouse Group, Goldman Sachs Merchant Banking Division, Jordan Company, Oaktree Capital Management, and Quadrangle Group.

The $3.3bn buyout of Seattle-based Getty Images by Carlyle Group was the second largest secondary buyout deal this year. Carlyle acquired Getty Images from Hellman & Friedman and Farallon Capital Management, which took ownership of the company in July 2008 in a deal valued at $2.4bn.

The third position is jointly shared by AOT Bedding Super Holdings and TransUnion. AOT Bedding Super Holdings, a manufacturer of mattresses and foundations in the US and Canada, entered into an agreement in August with Advent International to be acquired for $3bn. Ares Management, and Teachers' Private Capital were the selling shareholders.

TransUnion was acquired earlier this year by Advent International and Goldman Sachs Merchant Banking Division for $3bn. Selling shareholders Madison Dearborn Partners and The Pritzker Group originally paid $1.02bn for the company in June 2010. The exit earned them a 2.4x money multiple on their initial investment.

Party City Corporation, which was acquired in July by Thomas H Lee Partners for $2.6bn, is the fourth largest buyout deal in 2012 as at Q3 2012. The US-based party goods chain was previously owned by Advent International, Berkshire Partners, and Weston Presidio Capital.

Last on the top five list is Sweden-based Ahlsell. CVC Capital Partners paid $1.8bn for the company in May 2012. Cinven and Goldman Sachs Merchant Banking Division were the selling shareholders, having paid $1.2bn for Ahlsell in January 2006. The exit earned Goldman Sachs a 20% IRR with Cinven collecting a 2x return on its initial investment in to the company.

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