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Alternative Market Briefing

Global buyout deals rebound in Q3 2019 in terms of value: 1,157 transactions worth a combined $86bn

Tuesday, October 15, 2019

Laxman Pai, Opalesque Asia:

After a strong showing in 2018, global buyout deal momentum slowed in the opening quarters of 2019 amid challenging economic and geopolitical conditions.

Q2 2019 recorded the second-lowest aggregate deal value since 2014. However, buyout deals have rebounded in Q3 2019 in terms of value: 1,157 transactions worth a combined $86bn were made globally.

According to Preqin Quarterly Update Private Equity, this was primarily driven by an uptick in activity in North America, Europe and the Rest of World.

In contrast, Asia-based deals experienced a 48% fall in value from $11bn to $5.8bn.

Deal-making is not the only challenge facing managers, as buyout exits have also seen an appreciable drop in value and volume this year.

There were 408 exits in Q3 2019, marking the fifth consecutive quarterly fall. Although total exit value also fell from Q2, the seasonal uptick in Q2 bucked the overall trend: aggregate exit value rose $87bn in Q1, which was the largest quarterly increase in the last five years.

The proportions of IPO & follow-on and restructuring exits have both followed a downward trend over the last few years, while sale-to-GP exits have increased from 28% in Q3 2014 to 40% in Q3 2019.

Buyout funds produce its highest return of 15.5% over the 10 years

Buyout funds have outperformed the private equity asset class as a whole over the three-, five- and 10-year horizons to December 2018, producing its highest return ......................

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