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PitchBook Analyst Note: Echo Buyouts

2Q 2018

PitchBook Analyst Note: Echo Buyouts

June 7, 2018

PitchBook Analyst Note: Echo Buyouts
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The latest research note from PitchBook analysts explores secondary buyouts explicitly from the investor side, as they  grow in prevalence across the industry.

Key highlights:

Secondary buyouts (SBOs) are now an integral deal sourcing channel. SBOs currently account for more than one-quarter of buyout deals, up from 15% in 2008.
SBOs often require more operational work, but that does not mean longer hold times. Portfolio companies tend to undertake more add-on deals as they go through subsequent rounds of PE ownership. At the same time, however, the median hold time is lower for companies that have had two or more PE backers.
Certain companies and business models are more conducive to PE ownership/SBOs. General partners (GPs) that acquire a company through an SBO are more likely to use an SBO as the exit route, supporting findings from previous research that suggest certain businesses are better suited for PE ownership.