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Alternative Market Briefing

U.S. private equity deals plunge 20% in H1 2020

Monday, July 13, 2020

Laxman Pai, Opalesque Asia:

U.S. private equity transactions fell nearly 20% in deal value to $326.7 billion on 2,173 deals in the first six months of 2020 from the year-ago period, said a study.

According to a PitchBook report, many private equity managers pulled out of previously agreed deals, with some invoking clauses for materially adverse changes.

Quarterly figures show an even steeper fall, with Q2 2020 deal value down more than a third from Q1 2019 values.

PE firms had to get creative with dealmaking, turning to PIPEs and divestitures because traditional sources of deal flow have dried up. For instance, sponsor-to-sponsor transactions (or secondary buyouts, SBOs) have slumped to their lowest levels since 2009 and median buyout size dipped for the first time since 2015.

Despite deal sizes falling, several massive M&A transactions still closed in the quarter. HR management software firms Kronos and Ultimate Software Group merged to create an entity valued at $22.0 billion and JAB Holding's portfolio company, Compassion-First Pet Hospital-acquired National Veterinary Associates for $5.0 billion from Ares and OMERS.

Exit activity - US PE firms closed 392 exits totaling $134.8bn

US PE firms closed 392 exits totaling $134.8 billion through the first half of the year with a couple of massive IPOs driving much of the second quarter's exit value. Announced global PE exits were down approximately 70% in May 2020 compared to May 2019 following a ste......................

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