Pitchbook Private Equity Breakdown 4Q 2009

8/14/2019 Pitchbook Private Equity Breakdown 4Q 2009

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Private Equity: Data | News | Analysis

Breakdown 4Q 2009

Total Private Equity Deal Flow

Deal volume is beginning to stabilize as investors search for undervalued opportunies.The number of deals in 3Q 2009 declined 6.1% from 214 in 2Q 2009.The capital invested in 3Q 2009 declined 42% from $12 billion in 2Q 2009.

PitchBook Data, a private equity-focused research firm, has published a comprehensive set of stascs analyzing

United States private equity investment acvity through the first three quarters of 2009. Year to date, there have been

654 private equity deals and $33 billion in disclosed deal amounts, a figure that is roughly 60% less than the 1,532

deals closed in the first three quarters of 2008. The most recent quarter saw not only fewer deals done -- 201 were

closed -- but also much smaller deals in size, totaling just $7 billion in disclosed deal amounts. These results connue

the downward trend iniated almost 2 years ago.

While investment acvity connues at a significantly slower pace, the decline appears to be leveling off, indicang

that the boom may have been aained or is near. A number of other factors, including an increase in newly

announced deals and a steady rise in the median deal amount over the last year, provide posive indicaons that a

change in direcon may be occurring.

The Private Equity

Source: PitchBook


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Business Products & Services (B2B) represented the largest poron of

deal flow (31%) as investors shied their aenon away from

Consumer Products & Services (B2C) (25%), which ed B2B through

1H09 with 28%. Energy and Informaon Technology held steady during

the quarter aer declining significantly at the end of 2008. Healthcare

and Energy were the only industries to see increases in the number of

deals closed over last quarter.

Investment acvity connued to be fairly evenly dispersed throughout

the United States. The South saw the most disnct increase in private

equity acvity during the third quarter of 2009, rising 38% from 2008

to represent 11% of deal flow.

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PE Transactions (Count)

by Industry Sector Through 3Q 2009PE Transactions (Count)

by Region Through 3Q 2009

Percent of PE Transactions

(Count) by Deal Size

Lower middle-market and growth equity deals under $50 millionremained the most popular during the third quarter of 2009

(approximately 60% of deal flow). However, in what may be a promising

sign, acvity in the two classificaons above it made significant gains

over the second quarter of 2009 (not shown on chart).

Deals over $2.5 billion connue to decline as investors shi their focusto middle and lower middle-market deals where all-equity transacons

are more prevalent and financing is slightly easier to obtain. Deals from

$500 million to $1 billion and $50 million to $250 million have grown in

popularity as investors pursue add-ons to strengthen their current

plaorm companies.

Percent of PE Investment

(Total $ Amount) by Deal Size

Source: PitchBook

*

Source: PitchBo

Source: PitchBook Source: Pitch

Source: PitchBook

Source: PitchBook






Median deal size increased to pre-recession levels as investors shied their

focus back toward the middle and upper-middle markets. This trend will be

tested as private equity acvity increases in the coming quarters.

The median deal size for both Buyout and All Other categories made

significant gains over the same numbers from last quarter. The median Buyou

moved from $37 million at the end of the second quarter to $54 million.

Similarly, All Other deals moved from $18 million to $35 million over the sam

period. (1H09 numbers from 3Q 2009 Breakdown)

Distressed invesng as a percentage of the total private equity deal flow has been increasing steadily since the beginning of the year.Year to date, PE firms have acquired over 25 bankrupt companies, invesng above $3.2 billion. Addionally, there are 16 similar deals

announced this year that have yet to close. Distressed companies come with their challenges, but represent an aracve investmentopportunity for PE firms because of their relavely low price, and cleaner post-bankruptcy balance sheets. The number of buyouts ofbankrupt companies will most likely connue to rise as more companies run into trouble and private equity firms become more comfort-able with distressed invesng.

Distressed Companies Find A place in Private Equity

Median Deal Amount by Year Median Deal Amount by Deal Type

Source: PitchBook

*

Source: PitchBookSource: PitchBook

Buyouts of Companies in Chapter 11 and % of Total Deal Flow




The number of funds raised year to date declined 57%

compared to 143 funds closed through 3Q 2008.

Total capital raised year to date declined 60% compared to

the $254 billion raised through 3Q 2008.

Funds closed above $500 million received over 90% of all capital

commied in 3Q 2009.

No funds over $5 billion were closed during 3Q 2009.

Fewer new commitments for mega-funds are ancipated as limited

partners shi their sights toward middle-market funds where deals are

sll being done.

Fundraising Activity



The majority of new funds fall between $500 million and $5 billion. Howthe low number of addions means that there is no appreciable changedistribuon of closed funds year to date in 2009.

The State of Private Equity Fundraising

PitchBooks aggregated data and stascs for US private equity fundraising in the first three quarters of 2009 show that 61 funds wereclosed, raising over $98 billion for private equity investment. The third quarter of 2009 saw 11 funds closed for a total of $14.43 billion,versus 19 funds closed for a total of $28 billion during the second quarter of 2009. Funds over $500 million led fundraising acvity in the

third quarter, represenng 90% of funds closed during the quarter and over $14 billion in total.

While fundraising has slowed compared to the breakneck pace of the last two years, moves by LPs such as CalPERS, CalSTRS andPennsylvania SERS to increase their allocaons to private equity are a posive sign for fundraisers in the near term. Look for the rate offundraising to connue its modest pace as investors decide how best to ulize the almost $400 billion in unspent capital amassed over theprevious two years (as reported by PitchBook in June 2009).

Largest Funds Closed Through 3Q 2009

FirmApollo Investment Management

The Carlyle Group

First Reserve

The Carlyle Group/Riverstone

Lindsay GoldbergThe Blackstone Group

TA Associates

Welsh, Carson, Anderson & Stowe

TCW/Crescent Mezzanine

Quantum Energy Partners

Walton Street Capital

Charlesbank Capital Partners

Odyssey Investment Partners

Pine Brook Road Partners

The Riverside Company

Providence Equity Partners

Great Hill Partners

Oak Hill Capital PartnersHuntsman Gay Global Capital

The Carlyle Group

1

1

4

FundApollo Investment Fund VII

Carlyle Partners V

First Reserve Fund XII

Carlyle/Riverstone Global En & Pwr Fund IV

Lindsay Goldberg IIIBlackstone Real Estate Partners Europe III

TA XI

WCAS XI

TCW/Crescent Mezzanine Partners V

Quantum Energy Partners V

Walton Street Real Estate Fund VI

Charlesbank Equity Fund VII

Odyssey Investment Partners Fund IV

Pine Capital Partners

Riverside Capital Appreciaon Fund V

Providence TMT Special Situaons Fund

Great Hill Equity Partners IV

OHA Strategic Credit FundHuntsman Gay Capital Partners Fund

Carlyle Asia Growth Partners IV

Size

Source: PitchBook Plaorm

See PitchBooks US PE Capital Overhang Rep

PitchBook Library: www.pitchbook.com/2Q_

Fund Count by Fund SizeCapital R aised by Fund Size

*

Source: PitchBook

Source: PitchBook Source: Pitch
http://www.pitchbook.com/2Q_2009.htmlhttp://www.pitchbook.com/2Q_2009.html




By Number of Investments

Most Active Private Equity InvestorsThrough 3Q 2009

Source: PitchBook



Investor Name

Parthenon Capital

Oaktree Capital Management

Planum Equity

Thoma Bravo

Angelo Gordon & Company

Kohlberg Kravis Roberts

Marlin Equity Partners

Sun Capital Partners

The Carlyle Group

The Riverside Company

Warburg Pincus

Bain CapitalGolden Gate Capital

Hart Capital

J.F. Lehman & Company

Milestone Partners

Stonington Partners

Summit Partners

The Blackstone Group

Welsh, Carson, Anderson & Stowe

Advent Internaonal

American Capital

Apollo Investment Management

Banc of America Capital Investors

Baery VenturesCatalyst Investors

Clearview Capital

Cortec Group

General Atlanc

GTCR Golder Rauner

H.I.G. Capital

Hellman & Friedman

KPS Capital Partners

Pegasus Capital Advisors

Perseus

Pfingsten Partners

Providence Equity Partners

Riverside PartnersRoundTable Healthcare Partners

Sterling Partners

Stockwell Capital

Veronis Suhler Stevenson

Wayzata Investment Partners

Source: PitchBook

Deal Count

11

7

7

7

6

6

6

6

6

6

6

55

5

5

5

5

5

5

5

4

4

4

4

44

4

4

4

4

4

4

4

4

4

4

4

44

4

4

4

4

2 by number of advisory roles in transacons

Top Investment Banks & Advisors2

Houlihan Lokey Howard & Zukin

Goldman Sachs

William Blair & Company

Harris Williams

Morgan Stanley

Piper Jaffray

Lazard Middle Market

Alvarez & Marsal Holdings

Montgomery & Company

3 by number of financings provided

Top Lenders in Private Equity3

Bank of America

CIT Group

Wells Fargo

GE Capital

U.S. Bancorp

TriState Capital Bank

PNC Financial Services Group

Babson Capital Partners

Wells Fargo FoothillFih Third Bank

JP Morgan

Madison Capital Funding

1 by counsel provided on transacons

Top Law Firms in Private Equity1

Jones Day

Kirkland & Ellis

Latham & Watkins

Shearman & Sterling

Skadden, Arps, Slate, Meagher & Flom

Sullivan & Cromwell

Wilson Sonsini Goodrich & Rosa

Willkie Farr & Gallagher

Morgan, Lewis & Bockius

Blank Rome

DLA Piper Rudnick Gray Cary

Most Active Private Equity ServiceProviders Through 3Q 2009

By Number of Deals Serviced


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Your Single Source for Quality Private Equity Data

Only PitchBook tracks the entire private equity lifecycle and every party involved:

limited partners, inancial sponsors & investors, target companies, service

providers and key professionals. By dynamically linking these parties, PitchBook

makes it easy to identify relationships and networks. Additionally, it activelyresearches target companies the entire t ime they are in an investors portfolio so

youll always be up-to-date on the crucial details of a transaction and the

companys progress.

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The PitchBook Platform contains information on over 25,000 private equity-

backed companies, investors, and service providers, across every industry

segment, every deal size and every private equity deal type from announcement to

exit.

Deepest Level of Detail

PitchBooks mission is to provide hard-to-ind informat ion on private equity: the

details you can only ind through direct contact with key players and painstaking

background research.

PitchBook researches deal amounts and valuations, target company inancials and price multiples, capitalization structures, deal terms,

investor information and service provider contact information. It also tracks deal stakeholders and participants not just inancial

sponsors and investors, but also the many other inancial, legal, and advisory irms associated with taking a deal through to completion

Deal monitoring and research through the entire lifecycle. Without exception, PitchBook actively researches and reportson companies from announcement to inal exit . PitchBook captures the full inancing story, much more than just a snapshot of the deals

announcement.

Full spectrum coverage.PitchBook covers the full spectrum of private equity deals: all sizes, all industries, and all types.

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Pitchbook Private Equity Breakdown 4Q 2009

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