Private equity deal flow soars, exits strong


Just how healthy is the private equity industry right now?

In the post financial crisis ennui, that question has been hotly debated. Most people see to agree that the Golden Era has ended with a whimper and that the returns going forward will lag significantly. That said, there was plenty of good news in 2012.

Preqin has released research showing that North American deal flow reached "a post-Lehman high in 2012." Globally, 2,866 buyout deals were announced, valued at $254.6 billion. "This nears the global post-2008 highs of 2011, which witnessed $264.8bn globally from 2,900 buyout deals; compared to 2010, global deal flow in 2012 represents a 14% increase in the number and a 15% rise in the value of buyout deals," Pregin notes.

When it comes to actual exits, which have been relatively hard to achieve in the years following the financial crisis, there was also plenty of good news domestically. In North America, exits surged to post-Lehman high in 2012, as $147.1 worth of exits occurred during the year.

These are certainly welcome trends. And the proposed Dell deal may be putting some shine back on LBOs, which still account for 43 percent of all deals. You would have to say that these trends bode well for 2013, especially if the markets hold up.

Still, the industry faces some massive issues, especially in the area of fundraising. Going forward, the industry will no doubt continue to diversify, as the share of revenue accounted for by traditional private equity will continue to dwindle. But that will take place over the long-term. There will be a lot of good years as we travel that long and twisting road.

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