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Private Equity Firms Spent More Than $53 Billion on Public Companies in 1H 2016, the Highest Amount Since 2007

July 14, 2016

Private Equity Firms Spent More Than $53 Billion on Public Companies in 1H 2016, the Highest Amount Since 2007

PitchBook releases its 1H 2016 U.S. Private Equity Breakdown


SEATTLE — July 14, 2016 — Private equity firms are pouring more capital into public companies than ever before, according to recent analysis conducted by PitchBook Data, Inc. Total deal value through 2Q 2016 reached $298.4 billion, 18% of which went towards public companies, including Keurig Green Mountain, ADT Security Services and Veritas Technologies. Eight of the top ten private equity transactions of 1H 2016 were public-to-private deals. The first half of 2016 saw an 80% jump in total PE capital invested in public companies from the same period in 2015, and the largest proportion since 1H 2009. This development could signal that fewer quality investment opportunities in the private markets are pushing PE firms to put up larger sums of capital for more mature companies in the public market.


Common themes driving these public-to-private transactions include companies looking to focus on long-term growth rather than short-term returns, gain liquidity to invest in product improvements, and avoid the scrutiny of the public markets. Meanwhile, abundance of cheap debt has enabled private equity firms to access the capital necessary to complete these buyouts.


“We might be seeing a paradigm shift in the traditional company lifecycle,” said John Gabbert, PitchBook founder and CEO. “Our data shows that more than ever, public companies are opting to move back into the private market. The reasons driving this shift include the desire for companies to invest in long-term growth or the desire to turn off the noise that comes with the public markets in favor of working with just one owner.”


Deal Sizes Soar, Buoyed By Public-to-Private Activity


1H 2016 saw a decline in deal volume but climbing median deal sizes as investors set their sights on fewer deals with higher price tags. Over the last six months, PE firms invested $298 billion across 1,555 completed deals, a 20% YoY drop in terms of deal volume.


Meanwhile, median PE buyouts hit $120 million in 1H 2016, representing a 30% increase from the same period last year.


Private Equity in the Public Sector


Digging further into the surging median deal size, it becomes apparent that public-to-private activity is driving this trend. 18% of PE buyouts in 1H consisted of private equity firms purchasing public companies, an 80% increase from the same quarter last year and the highest proportion since 1H 2009.


Notable examples of public companies purchased by private equity firms in 2Q 2016 include:

  • Keurig Green Mountain, which was acquired by JAB Holding, Mondel─ôz International and BDT Capital Partners through a $14.2 billion public-to-private LBO in March 2016.
  • ADT Security Services, which was acquired by Protection 1 via its financial sponsor Apollo Global Management through a $15 billion public-to-private LBO in May of 2016.
  • Veritas Technologies, which was acquired by The Carlyle Group, Singapore sovereign wealth fund G.I.C. and other undisclosed investors through a $7.4 billion LBO in January of 2016.


“The driving force behind this take-private activity is the need for PE firms to put extremely high amounts of dry powder to work,” said Nizar Tarhuni, senior analyst at PitchBook. “They’re finding a mutually beneficial place to do that, given that the global growth environment is slow, and a group of publicly traded companies can benefit tremendously from being out of that spotlight.”


Additional findings in this report include:

  • PE deal flow/total capital invested, globally and by region
  • Median fund sizes and time to close
  • Median deal sizes by financing stage
  • Most active industries for investment
  • PE exit flow, globally and by region


Download the full report here [LINK]. For a daily dose of the latest news in the private equity space, subscribe to the PitchBook newsletter //pitchbook.com/PEVC_News.html.


About PitchBook

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