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Breakdown 4Q 2009

Total Private Equity Deal Flow

Deal volume is beginning to stabilize as investors search for undervalued opportunities.The number of deals in 3Q 2009 declined 6.1% from 214 in 2Q 2009.The capital invested in 3Q 2009 declined 42% from $12 billion in 2Q 2009.

PitchBook Data, a private equity-focused research firm, has published a comprehensive set of statistics analyzing United States private equity investment activity through the first three quarters of 2009. Year to date, there have been 654 private equity deals and $33 billion in disclosed deal amounts, a figure that is roughly 60% less than the 1,532 deals closed in the first three quarters of 2008. The most recent quarter saw not only fewer deals done -- 201 were closed -- but also much smaller deals in size, totaling just $7 billion in disclosed deal amounts. These results continue the downward trend initiated almost 2 years ago.

While investment activity continues at a significantly slower pace, the decline appears to be leveling off, indicating that the bottom may have been attained or is near. A number of other factors, including an increase in newly announced deals and a steady rise in the median deal amount over the last year, provide positive indications that a change in direction may be occurring.

The Private Equity

Source: PitchBook



Business Products & Services (B2B) represented the largest portion of deal flow (31%) as investors shifted their attention away from Consumer Products & Services (B2C) (25%), which tied B2B through 1H09 with 28%. Energy and Information Technology held steady during the quarter after declining significantly at the end of 2008. Healthcare and Energy were the only industries to see increases in the number of deals closed over last quarter.

Investment activity continued to be fairly evenly dispersed throughout the United States. The South saw the most distinct increase in private equity activity during the third quarter of 2009, rising 38% from 2008 to represent 11% of deal flow.

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PE Transactions (Count) by Industry Sector Through 3Q 2009

PE Transactions (Count) by Region Through 3Q 2009

Percent of PE Transactions (Count) by Deal Size

Lower middle-market and growth equity deals under $50 million remained the most popular during the third quarter of 2009 (approximately 60% of deal flow). However, in what may be a promising sign, activity in the two classifications above it made significant gains over the second quarter of 2009 (not shown on chart).

Deals over $2.5 billion continue to decline as investors shift their focus to middle and lower middle-market deals where all-equity transactions are more prevalent and financing is slightly easier to obtain. Deals from $500 million to $1 billion and $50 million to $250 million have grown in popularity as investors pursue add-ons to strengthen their current platform companies.

Percent of PE Investment (Total $ Amount) by Deal Size

Source: PitchBook

*Through ³Q ²⁰⁰⁹

Source: PitchBook

Source: PitchBook Source: PitchBook

Source: PitchBook

Source: PitchBook




Median deal size increased to pre-recession levels as investors shifted their focus back toward the middle and upper-middle markets. This trend will be tested as private equity activity increases in the coming quarters.

The median deal size for both Buyout and All Other categories made significant gains over the same numbers from last quarter. The median Buyout moved from $37 million at the end of the second quarter to $54 million. Similarly, All Other deals moved from $18 million to $35 million over the same period. (1H09 numbers from 3Q 2009 Breakdown)

Distressed investing as a percentage of the total private equity deal flow has been increasing steadily since the beginning of the year. Year to date, PE firms have acquired over 25 bankrupt companies, investing above $3.2 billion. Additionally, there are 16 similar deals announced this year that have yet to close. Distressed companies come with their challenges, but represent an attractive investment opportunity for PE firms because of their relatively low price, and cleaner post-bankruptcy balance sheets. The number of buyouts of bankrupt companies will most likely continue to rise as more companies run into trouble and private equity firms become more comfort-able with distressed investing.

Distressed Companies Find A place in Private Equity

Median Deal Amount by Year Median Deal Amount by Deal Type

Source: PitchBook


Source: PitchBookSource: PitchBook

Buyouts of Companies in Chapter 11 and % of Total Deal Flow



The number of funds raised year to date declined 57% compared to 143 funds closed through 3Q 2008.Total capital raised year to date declined 60% compared to the $254 billion raised through 3Q 2008.

Funds closed above $500 million received over 90% of all capital committed in 3Q 2009.No funds over $5 billion were closed during 3Q 2009. Fewer new commitments for mega-funds are anticipated as limited partners shift their sights toward middle-market funds where deals are still being done.

Fundraising Activity


The majority of new funds fall between $500 million and $5 billion. However, the low number of additions means that there is no appreciable change in the distribution of closed funds year to date in 2009.

The State of Private Equity Fundraising

PitchBook’s aggregated data and statistics for US private equity fundraising in the first three quarters of 2009 show that 61 funds were closed, raising over $98 billion for private equity investment. The third quarter of 2009 saw 11 funds closed for a total of $14.43 billion, versus 19 funds closed for a total of $28 billion during the second quarter of 2009. Funds over $500 million led fundraising activity in the third quarter, representing 90% of funds closed during the quarter and over $14 billion in total.

While fundraising has slowed compared to the breakneck pace of the last two years, moves by LPs such as CalPERS, CalSTRS and Pennsylvania SERS to increase their allocations to private equity are a positive sign for fundraisers in the near term. Look for the rate of fundraising to continue its modest pace as investors decide how best to utilize the almost $400 billion in unspent capital amassed over the previous two years (as reported by PitchBook in June 2009).†

Largest Funds Closed Through 3Q 2009 Firm

Apollo Investment ManagementThe Carlyle Group First ReserveThe Carlyle Group/RiverstoneLindsay GoldbergThe Blackstone GroupTA AssociatesWelsh, Carson, Anderson & StoweTCW/Crescent MezzanineQuantum Energy PartnersWalton Street CapitalCharlesbank Capital PartnersOdyssey Investment PartnersPine Brook Road PartnersThe Riverside CompanyProvidence Equity PartnersGreat Hill PartnersOak Hill Capital PartnersHuntsman Gay Global CapitalThe Carlyle Group

14,00013,700

9,0006,0004,7004,5174,0003,7002,8502,5001,7001,5001,5001,4301,1701,1401,1301,1251,1001,040

FundApollo Investment Fund VIICarlyle Partners VFirst Reserve Fund XIICarlyle/Riverstone Global En & Pwr Fund IVLindsay Goldberg IIIBlackstone Real Estate Partners Europe IIITA XIWCAS XITCW/Crescent Mezzanine Partners VQuantum Energy Partners VWalton Street Real Estate Fund VICharlesbank Equity Fund VIIOdyssey Investment Partners Fund IVPine Capital PartnersRiverside Capital Appreciation Fund VProvidence TMT Special Situations FundGreat Hill Equity Partners IVOHA Strategic Credit FundHuntsman Gay Capital Partners FundCarlyle Asia Growth Partners IV

Size ($M)

Source: PitchBook Platform

†See PitchBook’s ‘US PE Capital Overhang Report’ in the PitchBook Library: www.pitchbook.com/2Q_2009.html

Fund Count by Fund SizeCapital Raised by Fund Size


Source: PitchBook

Source: PitchBook Source: PitchBook

http://www.pitchbook.com/2Q_2009.html



By Number of Investments

Most Active Private Equity InvestorsThrough 3Q 2009

Source: PitchBook


Investor NameParthenon CapitalOaktree Capital ManagementPlatinum EquityThoma BravoAngelo Gordon & CompanyKohlberg Kravis RobertsMarlin Equity PartnersSun Capital PartnersThe Carlyle GroupThe Riverside CompanyWarburg PincusBain CapitalGolden Gate CapitalHart CapitalJ.F. Lehman & CompanyMilestone PartnersStonington PartnersSummit PartnersThe Blackstone GroupWelsh, Carson, Anderson & StoweAdvent InternationalAmerican CapitalApollo Investment ManagementBanc of America Capital InvestorsBattery VenturesCatalyst InvestorsClearview CapitalCortec GroupGeneral AtlanticGTCR Golder RaunerH.I.G. CapitalHellman & FriedmanKPS Capital PartnersPegasus Capital AdvisorsPerseusPfingsten PartnersProvidence Equity PartnersRiverside PartnersRoundTable Healthcare PartnersSterling PartnersStockwell CapitalVeronis Suhler StevensonWayzata Investment PartnersSource: PitchBook

Deal Count11777666666655555555544444444444444444444444

2 by number of advisory roles in transactions

Top Investment Banks & Advisors2

Houlihan Lokey Howard & ZukinGoldman SachsWilliam Blair & CompanyHarris WilliamsMorgan StanleyPiper JaffrayLazard Middle MarketAlvarez & Marsal HoldingsMontgomery & Company

3 by number of financings provided

Top Lenders in Private Equity3

Bank of AmericaCIT GroupWells FargoGE CapitalU.S. BancorpTriState Capital BankPNC Financial Services GroupBabson Capital PartnersWells Fargo FoothillFifth Third BankJP MorganMadison Capital Funding

1 by counsel provided on transactions

Top Law Firms in Private Equity1

Jones DayKirkland & EllisLatham & WatkinsShearman & SterlingSkadden, Arps, Slate, Meagher & FlomSullivan & CromwellWilson Sonsini Goodrich & RosatiWillkie Farr & GallagherMorgan, Lewis & BockiusBlank RomeDLA Piper Rudnick Gray Cary

Most Active Private Equity ServiceProviders Through 3Q 2009By Number of Deals Serviced



Your Single Source for Quality Private Equity DataOnly PitchBook tracks the entire private equity lifecycle and every party involved: limited partners, �inancial sponsors & investors, target companies, service providers and key professionals. By dynamically linking these parties, PitchBook makes it easy to identify relationships and networks. Additionally, it actively researches target companies the entire time they are in an investor’s portfolio so you’ll always be up-to-date on the crucial details of a transaction and the company’s progress.

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PitchBook researches deal amounts and valuations, target company �inancials and price multiples, capitalization structures, deal terms, investor information and service provider contact information. It also tracks deal stakeholders and participants – not just �inancial sponsors and investors, but also the many other �inancial, legal, and advisory �irms associated with taking a deal through to completion.

Deal monitoring and research through the entire lifecycle. Without exception, PitchBook actively researches and reports on companies from announcement to �inal exit. PitchBook captures the full �inancing story, much more than just a snapshot of the deal’s announcement.Full spectrum coverage. PitchBook covers the full spectrum of private equity deals: all sizes, all industries, and all types.

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the private equity breakdown 4q 2009 · pdf filepitchbook’s aggregated data and...

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