The following post is an excerpt from PitchBook's 2015 Annual PE Exits & Company Inventory Report. The data used in the report covers North America and Europe.
With corporate buyers offering PE-backed portfolio companies attractive price tags, and niche GPs able to offer outsized valuations for other PE-backed companies that fall within their operational focuses, the need and incentive to take companies public remains subdued. Capital markets remain a resource of last resort for many debt-laden companies needing to reduce leverage levels and establish relationships to help raise future capital quicker if need be, yet outside of this scenario, only best-in-class businesses are finding success via public listings.
Close to $41 billion was raised in public offerings last year across just 96 listings. On a yearly basis, this represents a decline of 38% in total offering value and 41% in total listings. The median PE-backed offering size, however, was up near 9% over last year, coming in at the highest level we’ve tracked at $268 million. This is again partially attributable to select, debt-strapped companies opting to go public in light of subdued interest from other PE firms and corporate acquirers wary of adequately servicing an increased debt load.
Speaking to the ability of top-tier businesses to successfully float, 11% of companies going public last year were able to list at the high end of their pricing range, a pleasant surprise compared to the 4.4% seen in 2014. Further, just 14.5% of companies priced at the low end of their expected ranges, relative to near 24% of companies pricing lower in 2014.
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PE-backed IPOs hitting range (#)
Close to three quarters of all PE-backed IPOs were within their targets last year
PE-backed IPO median valuation/EBITDA multiples
PE-backed IPO size & valuation ($M)
The median IPO valuation slid to a low unseen since 2008, at $714M