PE exits reach five-year high
Private equity firms took full advantage of the US M&A rebound in 2014, seizing the opportunity to exit more portfolio companies than at any time since the bottom of the market in 2009. Private equity investors sold 962 companies worth US$261.8 billion last year, an increase of 31 percent in volume and 70 percent in value compared to the 735 exits worth US$153.6 billion secured in 2013. Indeed, exit values were five times higher in 2014 than they were in 2009.
A number of factors have spurred this run of private equity exits. Stronger portfolio company performance; the return of well-funded strategic buyers to M&A markets; a robust auction market and, most importantly, very high sale prices have all contributed to the strong run of exits. The downside of the high valuations that private equity firms have been able to secure in a seller-friendly market is that it has been more difficult for buyout investors to purchase companies at attractive prices.
Exit volumes and values have been soaring, but new deal activity has been far more sedate. There were 871 buyouts closed in 2014, an increase of only 14 percent from 2013. The value of buyouts was US$153.8 billion in 2014, lower than the US$159.3 billion recorded in 2013. While buyout activity is well up from 2009 figures, when there were only 463 buyouts worth US$48 billion, the recovery has been modest when compared to the market for exits. Now that firms have, in some respects, cleared out their portfolios, attention will have to turn to new deals in 2015, which could finally prompt an increase in buyout volumes.
  1. Private equity exit values reached a five year high
  2. Exit volumes increased 31 percent from 2013 to 2014
  3. Buyout volume was up 14 percent from 2013