Public to Private buyouts are off to a fast start in 2010 with 10 completed or announced deals compared to 23 in all of 2009, according to the PitchBook Platform. The median deal amount is up as well, to $278 million in 2010 from only $121.5 million in 2009, and is even above 2008's median of $228 million. The rise in deal flow and median deal amount is likely attributable to an increased amount of available leverage, companies' increased willingness to make deals due to stabilized public markets and the ability of PE firms to find undervalued companies battered by the recession and credit crisis.
GF Data Resources’ latest Middle Market Report indicates a modest but pronounced uptick in completed deal volume in 4Q, closing out a cautious year for middle market dealmaking, with just 65 transactions completed in the GFDR universe in 2009, compared to 124 in 2008, and 158 in 2007.
The 4Q data, provided to GF Data Resources by 131 actively participating private equity firms reporting on transactions valued between $10 and $250 million, indicates 20 transactions were completed in the fourth quarter of 2009, up from the 14-16 deals completed in each of the three prior quarters, though still below peak volume of about 40 deals per quarter throughout 2006 and the first half of 2007.
Average pricing for transactions in 4Q remained low at 5.2x trailing twelve months adjusted EBITDA, compared to 5.1x in the prior quarter.
A new report from Cambridge Associates shows that during the quarter ending September 30, 2009, private equity and venture capital recovered some of the losses they had incurred in 2008 and early 2009, with each asset class logging its best performance since 2007. However, as in the previous quarter, public equity indices outperformed both, though for time horizons of three years and longer, private equity and venture capital returns continued to be significantly better than those of public equities.