Recent Investments Made by the U.S. Private Equity Industry

However the buyout market in the U.S. kept healthy throughout 2019, uncertainty in tax & regulatory policies under the Donald Trump’s reign, combined with intense competition from strategy buyers, and overwhelmingly high public equity market valuations, resulted in a decline in the transactional numbers, and the related amounts, in comparison to 2018. On a completely different line, this years’ pandemic has severely affected private equity careers of many, including the experienced PE professionals. However, there is every chance of economy reviving in the U.S. in the early months of 2021.

U.S. Buyouts Market

PE sponsors, in 2019, were involved in 4% fewer buyout transactions compared to 2018. The monetary value in investments also has fallen by more than 7%. But, despite the said decline, US private equity firms successfully executed a high number of buyout deals. An few of those comprise – Blackstone’s acquisition of US logistics firm GLP, worth $18.7 billion, take-private buyout of Merlin Entertainments worth $7.5 billion, USD 11 billion take-private buyouts of Ultimate Software, Goldman Sachs buyout deal worth $2.7 billion wherein it bought Capital Vision Services and a similar buyout deal of $2.7 billion by Onex Corp wherein it purchased WestJet.

Last year’s market for PE sponsor-led take-private monetary transactions was comprehensively flat in context of the deals made, however the total value of such deals went above 162%, as compared to 2018.

Growth Equity

Taking about the state of growth equity markets in the U.S. private equity industry, 2019 witnessed a year-on-year decline in terms of the number of growth equity investments made by the top private equity firms. The number of deals went down by 12% compared to 2018. Total value of the deals reported, dropped by a whopping 40% compared to the previous year.

Notable Exits

The volume of exits made by the top private equity investment professionals in the U.S. remained considerably low in 2019, with the values going down to their lowest since 2012. Year-on-year exits registered in 2019 declined by approximately 17% by number, and more than 28% by volume. 

Yet, in the wake of such weak exit numbers, year 2019 witnessed a constant increase in GP-led (general partners) non-primal offerings (non-primary sales of LP (limited partner) interests in an active fund). However, the buyout funds sought both, holding on to robust portfolio firms and offering limited partners, a means to bring liquidity that falls outside the conventional majority sales.

In spite of the economic slowdown, there happened many notable sales in the year 2019. CPPIB, PSP Investments, and Apax Partners did sell Acelity for USD 6.7 billion. Blackstone reported the sale of Refinitiv to LSE (London Stock Exchange) at USD 27 billion, debt included, mere ten months post the acquisition of Refinitiv at USD 20 billion from Thompson Reuters. 

The Disappointments

High-profile listings supported by VC-backed firms like Lyft, Pinterest, & Uber, the January,19 US federal government cessation, the WeWork IPO fallout, all contributed to the already lowering 2018 standards. Only 23 companies in 2019, backed by professionals at private equity in the US, were able to go public.

Noteworthy 2019 PE-backed IPOs constituted chemical manufacturer Avantor (backing from New Mountain Capital), pet supplier Chewy (backing from BC Partners), and dental firm Smile Direct Club (backing from Dubilier & Rice, Spark Capital, Clayton, and Kleiner Perkins.

Secondary Portfolio Firm Buyouts Made Exits in Big Numbers

2019 saw sponsor-to-sponsor transactions constantly increasing in terms of M&A exits, provided selling of half of all the targets to financial sponsors. Moving ahead into the future, the IPO market, sponsor-to-sponsor buyouts, and corporate acquisitions are forecasted to become vital to the best private equity firms in the U.S. that are seeking to liquidate inventory of their portfolio firms.

Added to that, the volume of GP-led sales is expected to increase in the wake of median holding periods going higher. Further, long-term PE investors (family offices,pension funds, sovereign wealth funds) are still pursuing direct investments, besides buyout deals.