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2014 Annual Private equity Breakdown: U.S. edition. Connect The Dots. PE Firm. Lender. Advisor. LP. VC Firm. Arranger. Fund of Funds. PE Firm. Company. Endowment. Law Firm. Advisor. Auditor. Consultant. ALL IN THE PITCHBOOK PLATFORM. ». Deal Activity. U.S. PE Deal flow . - PowerPoint PPT Presentation
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2014 ANNUAL PRIVATE EQUITY BREAKDOWN: U.S. EDITION
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LP
PE Firm
Fund of Funds
Consultant
Arranger
Advisor
Law Firm
Lender
Advisor
Endowment
Auditor
VC Firm
Company
CONNECT THE DOTS
PE Firm
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ALL IN THE PITCHBOOK PLATFORM
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DEAL ACTIVITY»
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U.S. PE DEAL FLOW » Although deal flow was down, capital invested in 2013 rose to $426 billion—its highest point since 2007.
Source: PitchBook
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
0
500
1,000
1,500
2,000
2,500
3,000
3,500$2
21
$300
$515
$874
$362
$156
$358
$383
$407
$426
1,780
2,161
2,721
3,235
2,434
1,559
2,1772,359 2,459
2,124
Capital Invested ($B) # of Deals Closed
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U.S. PE DEAL FLOW» Investment accelerated throughout the year, with 3Q being one of the most active quarters since 2009.
Source: PitchBook
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q2009 2010 2011 2012 2013
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
0
100
200
300
400
500
600
700
800
900$4
7
$27
$32
$50
$70
$80
$75
$132
$93
$87
$93
$110
$77
$83
$83
$165
$82
$99
$114
$131
400
359
361439
521
480
492
684
592 583
573
611 583
538
546
792
493
510
631
490
Capital Invested ($B) # of Deals Closed
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DEALS (#) BY DEAL TYPE» Add-ons and minority deals continued to gain in popularity in 2013.
2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%
20%
40%
60%
80%
100%
Recap
PIPE
Growth
Platform Creation
Add-on
Buyout
Source: PitchBook
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ADD-ONS V. NON ADD-ONS » The number of add-on deals surpassed platform buyouts for the first time ever in 2013.
Source: PitchBook
2004 2005 2006 2007 2008 2009 2010 2011 2012 20130
500
1,000
1,500
2,000
2,500
3,000
0%
10%
20%
30%
40%
50%
60%50
3 683 88
0 1114
808
505 72
0 867
869
772
895 10
49
1286
1456
1027
568
864 89
2
943
679
36%39%
41% 43% 44%47%
45%
49%
48%
53%
Add-on Non Add-on Add-On % of Buyout
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MEDIAN EBITDA MULTIPLES
FOR BUYOUTS» The median EBITDA-to-valuation multiple for buyout deals rose to 10.2x in 2013, returning to pre-crisis levels.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013x
2x
4x
6x
8x
10x
12x
3.9x 5x 5.
6x
5.7x
5.6x
4.2x 4.6x
4.7x 5.3x 6.
4x
2.3x
3.2x 3.
4x
3.2x 4x
3.6x 3.
6x 3.9x 3.3x
3.8x
6.2x
8.2x9x 8.9x
9.6x
7.8x 8.3x8.6x 8.6x
10.2x
Debt / EBITDA Equity / EBITDA Valuation / EBITDA
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MEDIAN DEBT % FOR BUYOUTS» PE firms incorporated more debt in their deals in 2013, both as a percentage of the purchase price and as a multiple of EBITDA.
2004 2005 2006 2007 2008 2009 2010 2011 2012 201352%
54%
56%
58%
60%
62%
64%
66%
62.8%
61.0%
62.3%
63.7%
58.1%
53.5%
56.1%
54.5%
61.6%
62.8%
Source: PitchBook
pitchbook.com
MEDIAN DEAL SIZE ($M)» At $50M, the median PE deal size is now at its highest level since 2007.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
All PE Deals Platform Buyouts Add-ons Growth Deals
Source: PitchBook
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INVESTMENTS (#) BY DEAL SIZE» Transactions of less than $25M dipped below 40% of deal flow for the first time since 2007.
2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$2.5B+
$1B-$2.5B
$500M-$1B
$100M-$500M
$25M-$100M
Under $25M
Source: PitchBook
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INVESTMENTS ($) BY DEAL SIZE» Deals of $1B or more represented more than 30% of capital invested for the first time since 2008.
2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$2.5B+
$1B-$2.5B
$500M-$1B
$100M-$500M
$25M-$100M
Under $25M
Source: PitchBook
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INVESTMENTS (#) BY INDUSTRY» B2B continued to be the main source of deal flow, while B2C fell below 20% for the first time ever.
Source: PitchBook
2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
B2B
B2C
Energy
Financial Services
Healthcare
IT
Materials & Resources
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INVESTMENTS ($) BY INDUSTRY» B2C and IT grew their share of capital invested to the some of the highest levels ever in 2013.
Source: PitchBook
2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
B2B
B2C
Energy
Financial Services
Healthcare
IT
Materials & Resources
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INVESTMENTS BY STATE» New York saw the biggest jump in deal activity in 2013, while Illinois experienced a severe 37% drop.
Source: PitchBook
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INVESTMENTS (#) BY REGION» The Mid-Atlantic region reclaimed the title as the most active area for PE investment in 2013.
Source: PitchBook
2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
West Coast
Southeast
South
Great Lakes
New England
Mountain
Midwest
Mid-Atlantic
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EXIT ACTIVITY»
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U.S. EXITS» Despite both exit flow and capital exited dropping by 21%, 2013 still proved to be one of the best years for exits in the last decade.
Source: PitchBook
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
0
100
200
300
400
500
600
700
800
$69
$82
$147
$156
$76
$42
$126
$126
$176
$139
390
477
520623
407
241
534590
758
598
Capital Exited ($B) # of Exits
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EXITS (#) BY TYPE» The 57 IPOs of PE-backed companies in 2013 marked a seven-year high, generating the second highest amount of capital on record.
Source: PitchBook
2008 2009 2010 2011 2012 2013*0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
63% 64%57% 55% 51% 51%
3%11%
8%5%
5% 10%
34%25%
35% 40% 44% 40%
Corporate Acquisition IPO Secondary Buyout
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FUNDRAISING»
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U.S. FUNDRAISING» 2013 marked the third consecutive year of increases in both fund closes and capital raised.
Source: PitchBook
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013$0
$50
$100
$150
$200
$250
$300
0
50
100
150
200
250
300
350$8
7
$123
$199
$275
$256
$153
$67
$122
$128
$179
163
229251
307264
145149
179193
212
Capital Raised ($B) # of Funds Closed
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FUNDRAISING ($) BY SIZE» Funds of $5 billion or more accounted for nearly half of the capital raised in 2013.
Source: PitchBook
2008 2009 2010 2011 2012 20130%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
3% 3%6% 6% 6% 4%
7% 6%
18%8% 9%
7%
10% 9%
17%
18% 15%13%
30% 40%
56%
54% 55%
31%
49%41%
13% 13%
45%
$5B+
$1B-$5B
$500M-$1B
$250M-$500M
$100M-$250M
Under $100M
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FUND RETURNS»
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PME BENCHMARKS METHODOLOGY
PitchBook’s newly developed PME Index and Benchmarks provide GPs and LPs with an effective way to compare returns from alternative investment funds with public equities. Indices produced by Russell Investments have been used to construct the PME vehicles used in computing the benchmarks. The PME equation can be customized using various indices from Russell Investments to create targeted peer groups (i.e. small-cap stocks, growth stocks, value stocks, etc.).
As there are multiple ways to calculate a PME, PitchBook has employed both the PME+ and the Kaplan-Schoar PME methods.
For more information on the PME calculations, please download the white paper at http://pitchbook.com/reports.html.
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PE NAV VS. RUSSELL 3000 INDEX PME+ VEHICLE
» PE funds have generated annual returns 3x greater than the public markets over the last 12 years
Source: PitchBook
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
0
50
100
150
200
250
300
Private Equity NAV Russell 3000® Index PME+ Vehicle
PE NAV CAGR: 7.9%Russell 3000® Index PME CAGR: 2.6%
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PE KAPLAN-SCHOAR PME BENCHMARK BY VINTAGE
YEAR» PE funds consistently outperform the public markets, except for young funds that are still in the J-curve
Source: PitchBook
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.8
0.9
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.51
1.63
1.47 1.45
1.30
1.16
1.03 1.02
0.96 0.93 0.92
*PME calculated using Russell 3000® Index
When using the KS PME, a value greater than 1.0 indicates outperformance of the public index (net of all fees); a value less than 1.0 indicates underperformance. For example, the 1.51 value for 2000 vintage funds means investors in a typical vehicle from that year are 51% better off investing in PE than if they invested in public equities over the same period.
