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US PE Middle Market Report

2Q 2018

US PE Middle Market Report

July 25, 2018

US PE Middle Market Report
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PE firms completed 1,358 middle market (MM) deals totaling $178.5 billion in the first half of 2018, topping last year's 1H performance. The pace of dealmaking remains vigorous, initial public offerings (IPOs) are making a comeback while secondary buyouts (SBOs) continue to flourish, and sizable funds are raising ample sums of cash. PitchBook's 2Q 2018 US PE Middle Market Report recaps key trends informing US PE and perpends factors that could impact the remainder of 2018.

Key highlights:

  • The dealmaking environment remains healthy. 654 US middle-market PE transactions closed in 2Q with a total value of $87.6 billion, 7.0% and 3.6% decreases over 1Q, respectively. The MM has seen robust activity, accounting for 68% of US PE-backed deals, compared to 58% in full-year 2017.
  • The IPO market stayed hot in 2Q. However, this represented only 2.9% of exit value in the quarter, compared to 3.5% in 1Q. SBOs continue to proliferate, accounting for 51% of all US MM PE-backed exits, marking their second straight year above 50%.
  • Fundraising activity continues to skew toward larger funds. General partners held a final close on 72 MM funds raising $61 billion in the first half of 2018, representing decreases of 3% and 29%, respectively, from 1H 2017. The average MM fund size came in at $847 million, a 27% increase over the $669 million average totaled in full-year 2017.

Note: This report was updated on August 1, 2018, as there was an error in an SEC filing that led to a misclassification of a fund.