Cristine Carlton April 07, 2014
With 1Q over, what takeaways should you know about and keep in mind as we progress through 2Q and the rest of 2014? Here are the top 5 highlights and key private equity trends of 1Q from PitchBook’s recently released 2Q 2014 U.S. PE Breakdown report:
2014 off to a strong start
2014 got off to a good start on the investment front. There were 589 completed U.S. private equity deals in 1Q totaling $108 billion in invested capital. That $108 billion made 1Q the best first quarter in several years, going back to the boom years of 2006 and 2007.
Corporate acquirers lead way for exits
Private equity firms exited 152 companies for a combined $46 billion in 1Q, putting 2014 off to a relatively brisk start on the exit front. Corporate acquirers led the way in terms of exits, acquiring 71 PE-backed companies and forking over $29.7 billion in the process.
Growth deals increase
In 2013, PE growth deals made up about 24% of all deal activity and this past quarter was right in line with that. We’re also seeing more capital being put towards growth deals, with larger firms beginning to shift more attention to minority deals, as well. With the competitive deal environment, we expect private equity firms to continue looking at more non-traditional sources of investments in order to put their money to work.
Add-on deals hit record high
Add-on deals made up 59% of all majority investments in the U.S. in 1Q. This is a record high and comes as PE firms look for different ways of putting capital to work. Add-ons are a quick way to build platform investments and put money to work in sectors firms are already familiar with.
74 funds closed, totaling $39B
74 funds reached a final close in 1Q, totaling $39 billion of capital raised. This looks to set 2014 on the same path as 2013, which was a strong year in terms of fundraising. One key metric we’ve been watching is the percentage of funds that are able to hit their fundraising targets; in 1Q, 95% of all U.S. PE funds hit their fundraising target.