AMERICAN INVESTMENT COUNCIL 2021-Q2 Private Equity Trends Table of Contents Page Deal Activity 3 Deal Financing and Pricing 6 Fundraising 11 Exits 13 PAGE 2 2021-Q2 Investment volume and number of deals increased by 60% and 61% respectively from 2020-Q2 Deal Value (Bil.) No. of Deals $800 6,000 $700 $753 $745 $684 5,000 $600 $648 $596 $500 4,000 $533 $505 $400 $441 3,000 $300 $380 $345 2,000 $200 $283 1,000 $175 $100 $173 $0 - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 Q2 2021 2021 PAGE 3 Source: PitchBook The 10 largest U.S. private equity deals in 2021-Q2 accounted for 29% of total deal value Investment Value Rank Company Description Date Financial Sponsor (Bil.) Business/Productivity RealPage 4/22/2021 $10.20 Thoma Bravo 1 Software IT Consulting and Perspecta 5/06/2021 $7.10 Peraton, Veritas Capital 2 Outsourcing Apollo Global Management, Certares, Hertz Road 5/12/2021 $6.50 3 Knighthead Capital Management Insight Partners, Norwest Venture Partners, CoreLogic Other Commercial Services 6/04/2021 $6.00 4 Stone Point Capital BayPine, StepStone Group, TSG Mavis Tire Supply Automotive 5/04/2021 $6.00 5 Consumer 6 Michaels Stores Specialty Retail 4/15/2021 $5.00 Apollo Global Management 7 Pluralsight Educational Software 4/06/2021 $3.50 Vista Equity Partners Elliott Management, Evergreen Coast Cubic Aerospace and Defense 5/25/2021 $3.10 8 Capital, Veritas Capital 9 A Cloud Guru Educational Software 6/02/2021 $2.00 Pluralsight, Vista Equity Partners Network Management ThycoticCentrify 4/13/2021 $1.40 Centrify, TPG 10 Software Note: The list above only reflects completed private equity transactions with disclosed investment values PAGE 4 Source: PitchBook, Web search transactions decreased to decreased transactions The average proportion of equity financing for LBO Sources of Financing of Sources 100% 20% 40% 60% 80% 0% 2003 34.8% 4.7% 54.5% includes bank debt, secured debt, senior unsecured debt, public/high yield debt, bridge loan and mezzanine debt. Other repres Other debt. mezzanine and loan bridge debt, yield public/high debt, unsecured senior debt, secured debt, bank pre includes the in equity is equity Rollover sponsors. LBO by provided equity is equity Contributed Note: 2004 32.6% 2.7% 61.8% 2005 29.8% 2.3% 66.4% 2006 31.0% 2.5% 65.4% 2007 30.8% 2.0% 65.7% 2008 38.8% 3.8% 56.1% 2009 45.5% 5.1% 51.6% 2010 41.4% 2.4% 54.8% 2011 38.3% 3.6% 56.3% 2012 51.1% 51.1% 38.0% 1.6% 59.6% 2013 LBO company that is cashed not is that company LBO 35.7% 1.4% 61.4% Contributed Equity - 2014 37.0% 1.5% 60.2% 2021 in 2015 40.5% 1.9% 56.2% 2016 Source: Standard and Poor’s Capital IQ Leveraged Commentaryand Data 41.1% 2.4% 55.0% out, but ent 2017 Rollover Equity s cash held by the target company. target by held cash the s 42.1% 1.6% 55.6% - Q2 rolled over and reinvested into the post the into reinvested and over rolled 2018 40.4% 1.6% 57.7% 2019 45.5% 1.9% 51.3% Debt 2020 46.8% 2.7% 49.9% Other - LBO company. Debt 2021 Q1 47.2% 0.8% 51.3% 2021 PAGE Q2 50.5% 0.6% 48.2% 5 6 Equity financing decreased to 50.8% for large corporate in 2021-Q2 Equity Financing Middle Market Large Corporate 70% 60% 50% 58.5% 51.4% 50.8% 50.1% 49.3% 40% 48.9% 47.3% 47.2% 45.9% 45.7% 45.5% 45.3% 45.3% 45.0% 42.9% 42.5% 42.1% 42.0% 41.5% 41.4% 41.3% 40.7% 40.3% 30% 39.2% 37.7% 37.0% 35.2% 34.2% 32.3% 31.5% 20% 10% 0.0% 0.0% N/A N/A N/A 0% N/A 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 Q2 2021 2021 Note: Large corporate issuers have EBITDAs of more than $50 million. Middle market issuers have EBITDAs of $50 million or less. PAGE 6 Source: Standard and Poor’s Capital IQ Leveraged Commentary and Data U.S. LBO loan volume in 2021-Q2 increased 258.2% to $40 billion as compared to 2020-Q2 Loan Volume (Bil.) $150 $113 $100 $97 $85 $78 $78 $76 $73 $67 $59 $51 $47 $50 $46 $40 $31 $5 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 Q2 2021 2021 Note: Data above reflect all loans syndicated in the U.S. market for the purpose of LBOs. Ex-U.S. companies are excluded. PAGE 7 Source: Standard and Poor’s Capital IQ Leveraged Commentary and Data The 10 largest U.S. LBO loans in 2021-Q2 accounted for 52% of the total LBO loan volume Rank Company Description Launch Date1 Loan Value (Bil.) Financial Sponsor 1 McAfee Enterprise Computers & Electronics 4/16/2021 $2.95 Symphony Technology Group 2 Proofpoint Computers & Electronics 6/1/2021 $2.85 Thoma Bravo LLC 3 First Student /First Transit Transportation 6/28/2021 $2.52 EQT Partners Manufacturing & Culligan Holding 6/7/2021 $2.48 BDT Capital Partners LLC 4 Machinery 5 Cubic Computers & Electronics 4/16/2021 $2.18 Veritas Capital 6 Mavis Tire Express Services Retail 4/19/2021 $2.12 BayPine LP 7 Conair Corporation Home Furnishings 5/6/2021 $1.67 American Securities Capital Partners 8 ACProducts Forest Product 4/26/2021 $1.60 Platinum Equity 9 Wells Fargo Asset Management Services & Leasing 4/13/2021 $1.41 GTCR Golder Rauner 10 Ascensus Services & Leasing 5/12/2021 $1.23 Stone Point Capital Note: The ranked list is based on a sample of all loans syndicated in the U.S. market for the purpose of LBOs. Ex-U.S. companies are excluded. Companies with loans in the table above may be involved in transactions that are still ongoing and therefore, will not appear in the list of top 10 private equity transactions (slide 4). 1 Date of loan syndication. PAGE 8 Source: Standard and Poor’s Capital IQ Leveraged Commentary and Data, Web search Average debt multiples for U.S. LBOs increased to 5.9x in 2021-Q2 as compared to 4.9x in 2020-Q2 Debt/EBITDA 7x 6x 6.2x 6.1x 5.9x 5.8x 5.8x 5.7x 5.7x 5.7x 5x 5.6x 5.4x 5.4x 5.3x 5.3x 5.1x 5.0x 4.9x 4x 4.6x 3.8x 3x 2x 1x 0x 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 Q2 2021 2021 Note: EBITDA is adjusted for cost savings and synergies. Debt includes senior debt and subordinated debt. PAGE 9 Source: Standard and Poor’s Capital IQ Leveraged Commentary and Data The average purchase price multiples for U.S. LBOs decreased to 11.5x in 2021-Q2 from 11.9x in 2021-Q1 Equity/EBITDA Senior Debt/EBITDA Sub Debt/EBITDA Others Purchase Price Multiple 14x 11.9x 11.5x 11.5x 12x 11.4x 10.6x 10.6x 10.3x 10.0x 9.7x 10x 9.7x 9.1x 8.8x 8.8x 8.7x 8.5x 8.4x 8.4x 8x 7.7x 6x 4x 2x NA 0x 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 Q2 Q2 2021 2021 2021 M&A 1 Note: EBITDA is adjusted for cost savings and synergies. 1 Average purchase price multiples for six months ending Jun, 2021. PAGE 10 Source: Standard and Poor’s Capital IQ Leveraged Commentary and Data Annual U.S. private equity fundraising volume reached $180 billion in 2021-H1 Capital Raised (Bil.) Capital Raised (Bil.) No. of Funds No. of Funds $350 600 $300 $332 500 $250 $275 400 $252 $200 $223 300 $208 $150 $185 $180 $178 $162 $161 200 $100 $110 $101 100 $50 $72 $56 $0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1H 2021 Note: Graph above reflects data from buyout, diversified equity, growth equity, infrastructure and energy funds. PAGE 11 Source: PitchBook U.S. callable capital reserves (“dry powder”) of private equity funds decreased to $736 billion as of December 2020 Dry Powder Dry Powder (Bil.) $800 $700 $760 $736 $714 $600 $614 $500 $530 $400 $471 $411 $407 $396 $392 $300 $376 $363 $354 $347 $342 $200 $100 $0 Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec. 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Note: Dry powder figures are global and not specific to the United States. PAGE 12 Source: Pitchbook Annual U.S. exit volume increased 160% from 2020-Q2 to $141 billion in 2021-Q2 Exit Amount (Bil.) Exit Amount (Bil.) No. of Exits No. of Exits $450 1600 $400 $421 $350 $407 $383 1200 $381 $300 $358 $361 $323 $318 $250 $272 800 $200 $231 $150 $187 400 $100 $149 $141 $129 $50 $93 $0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 Q2 2021 2021 PAGE 13 Source: PitchBook Two of the ten largest U.S. private equity exits during 2021-Q2 were strategic M&As Rank Company Name Exit Type1 Date Exit Size (Bil.) Sellers 1 RealPage Financial M&A 4/22/2021 $10.20 Apax Partners, Serent Capital, Volition Capital 2 Blue Yonder (Arizona) Strategic M&A 4/23/2021 $7.10 New Mountain Capital, The Blackstone Group 3 CoreLogic Financial M&A 6/4/2021 $6.00 Cannae Holdings, Senator Investment Group InTandem Capital Partners, PennantPark Floating Cano Health Strategic M&A 6/4/2021 $4.4 4 Rate Capital, PennantPark Investment Griffin Gaming Partners, John Burbank, Kohlberg Kravis Roberts, Maynard Webb, Nimble Ventures, AppLovin Public Offering 4/15/2021 $2.00 5 Orient Hontai Capital, Streamlined Ventures, Synetro Group, Ullas Naik, Webb Investment Network 4/15/2021 6 Agilon Health Public Offering $1.07 Clayton, Dubilier & Rice 7 LifeStance Health Public Offering 6/10/2021 $0.72 Silversmith Capital Partners, Summit Partners, TPG 8 Mister Car Wash Public Offering 6/25/2021 $0.65 Leonard Green & Partners, Penfund Canada Pension Plan Investment Board, Fidelity Endeavor Public Offering 4/29/2021 $0.51 Mgmt & Research, Fisher Lynch Capital, GIC, Saudi 9 Arabia's Public Investment Fund, Silver Lake, SoftBank 32 Equity, Annox Capital, Bond Capital, Booking Holdings, Delta Air Lines, Durable Capital Partners, General Atlantic, IPD Capital, J Ventures, Jump DC, CLEAR Public Offering 6/29/2021 $0.41 Liberty Media, LionTree Partners, LMM, Partnership 10 Fund for New York City, Revolution, RiverPark Ventures, Sterling Equities, T.