United States Private Equity Buyout Review
FIRST QUARTER 2019 Table of Contents
United States PE Buyout Market in Q1 2019 3 $ Invested and # Companies Financed 4 Investment by Company Stage 6 PE Investment vs. all United States M&A 7 Top United States PE Buyout Deals 8 Investment by Company Location 9 Investment by Investor Location 10 Investment by Deal Size Range 11 Investment by Company Industry 12 United States Firms’ Investment Abroad 13 Buyout Funds Raised 15 PE Buyout-Backed Exits 16 PE Buyout Returns 17 Explanatory Notes & Contacts 18 United States Private Equity Buyout Market Activity First Quarter 2019
United States Buyout-PE Market Trends
InFirst Q1 2019 Quarter the national2019 buyout and related private equity market saw a total of 690 transactions collectively valued at $72.6 billion, an increase of 101% over Q1 2018 in dollar terms, but down slightly by 2% in terms of deal volumes. In dollar terms, this represented the second strongest quarter on record since 2007.
Top deals for the quarter were led by Florida based software and computer services company Ultimate Software, which raised $11 billion. The next three largest deals were Dun & Bradstreet, Tallgrass Energy, and Multi-color Corporation, which raised $6.8 billion, $3.3 billion, and $2.5 billion respectively. Private equity buyouts continued to show growth as compared to traditional M&A, with PE deal volumes increasing to increase to 29% in Q1, a three-year high.
American dealmaking abroad was led by Blackstone and Hellman & Friedman, which led a $5.6 billion investment in Scout24, and internet content company located in Munich, Germany. British Inmarsat Satellite Group was taken private by Apax Partners and Warburg Pincus for $3.4 billion.
Market Trends by Sector Companies within the Computer Software sector comprised 17% of all deals recorded during the first quarter. Industrial & Energy companies and Internet Specific companies followed with 15% and 11% shares of deal volumes respectively. Computer Software companies also captured the largest share of deal values with $30 billion, or 41%.
United States Fund Performance The performance of United States buyout funds continued to show strong over-performance to public market comparators through to the end of the fourth quarter of 2018. Published data provided by Cambridge Associates shows U.S. buyout funds with vintage years of 2000 or greater returning a since inception IRR of 13.3% as of the end of Q4 2018. This puts private equity performance far ahead of public markets and most other world regions.
www.refinitiv.com/dealsintelligence Investments in United States Companies First Quarter 2019 | Private Equity Buyout
Historical Investment in United States Companies: Private Equity Buyout Deal Values United States companies secured $72.6 billion in Q1 2019, the strongest first quarter since 2007. Total buyout deal values in Q1 had more than doubled as compared to the same period last year.
$600 $527.8
$500
$400
$300 $255.8 $228.2 $216.5 $200 $184.9 $162.8 $145.7 $156.6 $137.6 $131.3 $112.2 $125.2 $96.0 $100 $68.6 $72.6 PE Deal Values ($ Billions) ($ Values PE Deal $44.9 $47.1 $58.6 $20.5 $22.7 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 Q2 Q3 Q4
www.refinitiv.com/dealsintelligence Investments in United States Companies First Quarter 2019 | Private Equity Buyout
Historical Investment in United States Companies: Private Equity Buyout Deal Volumes Buyout & related private equity dealmaking saw a sturdy first quarter in 2019 with 690 deals, the second strongest first quarter ever recorded.
3,000 2,759
2,500 2,425 2,244 2,138 2,126 2,057 2,039
2,000 1,797 1,729 1,526 1,590 1,579 1,500
1,106 1,102
1,000 866 712 669 690 566 544
500 # of PE Buyout Deals Buyout PE of #
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 Q2 Q3 Q4
www.refinitiv.com/dealsintelligence PE-Buyout Dealmaking First Quarter 2019 | Private Equity Buyout
Deal Volumes by Transaction Type Add-On Acquisitions deals increased to 385, the strongest individual quarter in the past 3 years. LBO deals decreased to 15% of all deals, the first time in the past year the share of LBOs had fallen below 20%.
800
707 714 680 690 700 658 643 608 589 568 594 600 553 580
534
500
400
300
200
# of PE Buyout Deals Buyout PE of # 100
0 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 LBO Minority Stake Add-On Acquisition Other
www.refinitiv.com/dealsintelligence PE-Buyout Dealmaking First Quarter 2019 | Private Equity Buyout
PE-Buyout Dealmaking Versus All M&A of United States Targets United States buyout deal volumes in Q1 were slightly down 2% year-over-year, however private equity’s share of traditional M&A has continued to increase to 29%, setting a new three-year high.
800 35%
700 30%
600 25%
500 20% 400 15%
300
10% 200
# of Deals of # 100 5%
0 0% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 # of PE Deals PE Deals as % of all M&A Activity
www.refinitiv.com/dealsintelligence Top United States Private Equity Deals First Quarter 2019 | Private Equity Buyout
Portfolio Company Investors
Deal Value Rank CompanyPortfolio Name Company Location Sector Investing Investors Firms (Disclosed) ($ Millions)
Blackstone Group, Gic Special Investments Pte 1 Ultimate Software $11,000 Weston, FL Software & Computer Services Ltd, Hellman & Friedman, JMI Management, Canada Pension Plan Investment Board Thomas H Lee Partners, Qatar Investment 2 Dun & Bradstreet $6,881 Short Hills, NJ Computer Software Authority, CC Capital 3 Tallgrass Energy $3,300 Leawood, KS Oil & Gas Gic Special Investments Pte, Blackstone Group
4 Multi-Color Corporation $2,500 Batavia, OH Containers & Packaging Platinum Equity
Communications/ Networking 5 ConvergeOne $1,800 Eagan, MN CVC Capital Partners SICAV FIS SA Software Silver Lake Partners, Ontario Teachers Pension 6 Verily Life Sciences $1,000 South San Francisco, CA Medical Services Plan Board Discovery Midstream 6 Partners $1,000 Dallas, TX Oil & Gas Drilling & Support Services Stonepeak Partners
8 Goodnight Midstream $930 Dallas, TX Sanitary Services TPG Capital Managemen
9 AGL Credit Management LP $650 New York, NY Financial Services Abu Dhabi Investment Authority
Jordan Company, KKR & Co, Durational Capital 10 Bojangles' $594 Charlotte, NC Fast Food Restaurants Management
www.refinitiv.com/dealsintelligence Top United States Private Equity Deals, by State First Quarter 2019 | Private Equity Buyout
North American Rankings – First Quarter 2019
Total Deal Values Year-Over-Year Rank State # of Deals ($ Millions) Change in # of Deals
1 California 102 $7,256.00 ▲ 134.6%
2 Texas 94 $4,470.31 ▼ -54.5%
3 New York 50 $5,939.69 ▲ 253.7%
4 Illinois 34 $246.94 ▲ 26.6%
5 Massachusetts 31 $6,994.91 ▲ 1444.1%
6 Florida 31 $12,337.50 ▲ 536.9%
7 Pennsylvania 28 $530.00 ▲ 488.9%
8 Ohio 27 $2,500.00 ▲ 1542.6%
9 Georgia 24 $651.40 ▼ -77.7%
10 North Carolina 22 $998.00 ▲ 2661.3%
www.refinitiv.com/dealsintelligence Private Equity Investment by Non-American Investors First Quarter 2019 | Private Equity Buyout
Non-resident investors participated in 79 buyout deals in U.S.-based companies in Q1 2019, collectively valued at $65 billion. Canadian investors were involved in 28 deals, while European investors (including the UK), were involved in 25 transactions.
UK: 19 Deals Canada: 28 Deals Europe: 6 Deals
Singapore: 5 Deals
www.refinitiv.com/dealsintelligence United States PE-Buyout Investment by Deal Size Range First Quarter 2019 | Private Equity Buyout
Deals sized between $1 and $10 billion made up two thirds of dollars disbursed. Most deal sizes continue to be kept confidential by investors and portfolio companies.
3% 1%
$1.4 $4.8 $11.0 3% 6% $7.4 ≥ $10 Billion
$1 < $10 Billion $72.6 Billion $500 Million < $1 Billion 690 Deals Invested $100 < $500 Million
< $100 Million
Deal Values Undisclosed 87% $47.9
www.refinitiv.com/dealsintelligence Investments by Sector First Quarter 2019 | Private Equity Buyout
Q1 2019 Total # of Deals Q1 2019 Total Deal Values ($ Billions) Companies within the Computer Software sector comprised 17% of Computer Software companies captured the largest share of deal values all deals recorded during the period. in Q1 2019 with $30 billion.
Q1 2019 Total # of Deals Q1 2019 Total Deal Values ($ Billions) 140 $35
120 $30
100 $25
80 $20
60 $15
40 $10
20 $5
0 $0
Computer Software Industrial/Energy Medical/Health Consumer Related Internet Specific Business Serv. Utilities & Transportation Financial Services Manufact. Computer Hardware Other
www.refinitiv.com/dealsintelligence United States Firms’ Private Equity Investments Abroad First Quarter 2019 | Private Equity Buyout
PE Investments by American Firms in Non-US Companies United States funds invested in 109 deals involving non-US companies in Q1 2019, with collective deal values of $29 billion, surpassing the full year total in 2009.
$140 600
$120
500 Thousands
$100
400
$80 300 $60
200 $40
100
$20
# of Deals of # Deal Values ($ Billions) ($ Values Deal
$0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 2019 Total Deal Values, U.S. & Non-U.S. Investors # of Deals
www.refinitiv.com/dealsintelligence Top Private Equity Deals by U.S. Firms Investing Abroad First Quarter 2019 | Private Equity Buyout
Portfolio Company Investors
Deal Value Rank CompanyPortfolio Name Company Location Sector InvestingInvestors Firms (Disclosed) ($ Millions)
1 Scout24 $5,623.24 Munich, Germany Internet Content Blackstone Group, Hellman & Friedman
2 Inmarsat PLC $3,400.00 London, UK Wireless Communications Warburg Pincus Aspen Insurance Holdings, $2,600.00 Hamilton, Bermunda Financial Services Apollo Global Management 3 Ltd.
4 Daisy Holdings Ltd $1,325.00 Nelson, UK Internet Communications Ares Management
Turnkey Integrated Systems and E-Front SASU $1,300.00 Paris, France BlackRock 5 Solutions
Brookfield Global Integrated $1,000.00 Markham, Canada Oil & Gas CCMP Capital Advisors 6 Solutions Canada LP
7 WSH Investments Ltd $996.68 Reading, UK Plastics Manufacturing Clayton Dubilier & Rice
8 SemCAMS Midstream ULC $793.41 Calgary, Canada Oil & Gas KKR & Co
9 Prisma Medios de Pago SA $725.00 Buenos Aires, Argentina Financial Services Advent International Corp
10 MAX $691.09 Bnei Barak, Israel Financial Services Warburg Pincus
www.refinitiv.com/dealsintelligence US Private Equity Fundraising Continues to Soar First Quarter 2019 | Private Equity Buyout
PE-Buyout Fundraising by U.S. Firms A total of 125 U.S. buyout funds completed in the first quarter of 2019, a 28% over the number of fund closings in the same period last year. Those funds collectively raised $63 billion, 17% higher then the full year total in 2010, and up 6% from Q1 2018. $300 400
350 $250
300
$200 250
$150 200
150 $100
100 Funds # of of #
Funds Raised ($ Billions) ($ Raised Funds $50 50
$0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 2019 PE-Buyout Fundraising # of Funds
www.refinitiv.com/dealsintelligence U.S. PE-Backed Exits First Quarter 2019 | Private Equity Buyout
A total of 133 exits were completed in Q1 2019, resulting in exit volumes being up slightly as compared to Q1 2018, which had 132 completed exits.
Portfolio Company Investors Deal Value Rank Company Name Location Sector Investing Firms (Disclosed) ($ Millions)
1 LGS Innovations $750.00 Herndon, VA Telecommunications Services Madison Dearborn Partners LLC
2 Endeavor Robotics $385.00 Chelmsford, MA Robotics Arlington Capital Partners Antares Capital, Madison Capital Funding, Norwest Actagro $340.00 Fresno, CA Agricultural Products 3 Equity Partners, Norwest Mezzanine Partners
4 MicroPact $185.00 Herndon, VA Business and Office Software Enlightenment Capital Water Treatment Equipment & Waste Aquion $160.00 Roselle, IL Mason Wells, Waud Capital Partners 5 Disposal Systems
200
150 100
# of Exits of # 50 0 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
M&A Public Secondary Sale
www.refinitiv.com/dealsintelligence Cambridge Associates: Buyout Fund Performance Fourth Quarter 2018 | Private Equity Buyout
United States private independent Credit Opportunities & Subordinated Capital Funds have held a steady despite the public market downturn over the past year.
14% 14%
13.3% 13% 13%
12% 12%
11% 11%
10.0% 10% 10%
9% 9%
8% 8%
7% 7% Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4 2018 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4 2018 United States Credit Opportunities & Subordinated Capital Funds United States Buyout Funds mPME: Russell 3000 Index mPME: Russell 3000 Index
Source: Cambridge Associates Explanatory Notes First Quarter 2019 | Private Equity Buyout
Contributors to this analysis are provided with additional packages 1. Data collected and analyzed by Refinitiv for this statistical report were drawn from a variety of sources including Refinitiv M&A databases, regulatory of data. If you would like to filings, press releases, and proprietary reports from U.S. and non-resident venture capital firms, private equity firms, law firms, and other service participate in the submission providers. process, receive quarterly press 2. Key statistical indicators (e.g., total disbursements, per quarter or per annum) are influenced by the fact that a substantial fraction of buyout and other releases, or have questions about PE deals are not fully disclosed. For instance, “dollars invested” in a given period pertain only to those deals with values that have been published or our venture capital criteria, please confidentially disclosed to Refinitiv. contact us at: 3. The data also highlight the deal-making of U.S. funds in non-U.S. companies. “Dollars invested” pertain to the total value of disclosed deals in which Gavin Penny U.S. funds have participated and not the specific U.S. financial contributions to these deals. Deals are first tracked as of announcement date, then Tel: 416-687-7577 tracked as of completion date upon closing.
E-mail: [email protected] 4. Statistical data reflect all essential forms of buyout-PE deal-making, including control-stake acquisitions of businesses, minority equity investments, restructuring and special-situations transactions, mezzanine deals, acquisitions for expansion and other quasi-equity investments.
Merissa Selts 5. Fund performance data and public market equivalents are produced via the Cambridge Associates Benchmark Calculator, available through Eikon. Tel: 646-223-8415 Returns are for United States buyout, credit opportunities, and subordinated capital funds with vintage years of 2000 or greater, on a first cash flow E-mail: [email protected] basis, in U.S. dollars, from inception to the end of the indicated quarter, under preliminary data mode Q4 2018. Pooled internal rates of return are net of fees, expenses and carried interest. CA Modified Public Market Equivalent (mPME) replicates private investment performance under public market conditions. The public index’s shares are purchased and sold according to the private fund cash flow schedule, with distributions calculated in the same proportion as the private fund, and mPME NAV is a function of mPME cash flows and public index returns.
6. All current and previous years data is as of Monday, April 15th, 2019. Data is continuously updated and is therefore subject to change. All figures are in U.S. dollars unless otherwise noted..
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