Total private equity buyout value goes up
Total private buyout value has grown by 10 per cent to $582 billion, capping the strongest five-year run in the industry’s history with $2.5 trillion in disclosed buyout deal value, according to Bain & Company’s annual Global Private Equity report.
Even though stiff competition and rising asset prices pushed down a number of individual buyout transactions (by 13 per cent), the total buyout value was higher thanks to an upswing in public-to-private transactions, which globally reached their highest value since the previous take-private boom in 2006-07.
Additionally, private equity (PE) funds managed to attract an impressive amount of capital in 2018, however the pace slowed down from 2017’s record-breaking performance, the report said.
Bain’s private equity practice partner, James Viles, said the past five years have been the best times for the private equity industry and saw some of the highest levels of capital raised and being put to work, the most exits and decent returns.
“As good as it all sounds, though, PE firms are working overtime to keep the momentum going,” he said.
“Chronically heavy competition is driving deal multiples to historic highs, and growing jitters about an eventual economic downturn are impacting decision-making.
“These risks are raising the bar for the buyer to do great due diligence, which involves integrating both the commercial and operational sides of diligence, and to structure deals thoughtfully.”
However, despite the strong year for PE, fund managers would continue to see some challenges in the coming months and to counterbalance those risks, the study indicated a number of strategies identified by top performers.
These would include a greater focus on buy-and-build strategies, merger integration and diversification.
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