pitchbook pe breakdown 2012[1]

8/2/2019 PitchBook PE Breakdown 2012[1]

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PitchBook

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Bet ter Data. Bet ter Decisi ons.

itchP ookB


2/171-877-2

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Table Of Contents

Private Equity Deal Flow ....................................................... 3

Deals by Region & Industry ................................................... 4

Transacons by Amount & Deal Count ................................. 5

Purchase Mulples & Leverage ............................................. 6

Add-On Acvity ..................................................................... 7

Deal Flow By Industry ............................................................ 8

Private Equity Exit Flow ......................................................... 10

Private Equity Fundraising .................................................... 11

Private Equity Fund Size & Average Time to Close ............... 12

Selected 2011 Vintage & Open Funds ................................... 13

Deal-Related League Tables ................................................... 14

About PitchBook..................................................................... 15

COPYRIGHT 2012 by PitchBook Data, Inc. All rights reserved. No part of this publicaon may be reproduced in any form or by any

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systems without the express wrien permission of PitchBook Data, Inc. Contents are based on informaon from sources believed

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such or used in substuon for the exercise of independent judgment.

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Private Equity in 2011



Overall, 2011 saw a significant amount of acvity with deal flow, exits and fundraising all ending well above the lows

seen in 2009 as U.S private equity connues along its path towards a full recovery. The light at the end of the tunnelappears to be very close for the U.S. private equity industry, according John Gabbert, Founder and CEO of PitchBook.With $425 billion of dry powder, 4,200 mature porolio companies to sell and 409 PE funds currently fundraising, it ishard not to be opmisc about what 2012 will look like.

Increased overall deal acvity throughout 2011 was a result of improving confidence in the countrys economy, saidRichard Marn, Senior Director for the Merrill DataSite virtual data room business at Merrill Corporaon. As we moveinto 2012, we ancipate that trend to connue and we are opmisc that the volume of financial transacons willrebound from the previous two years lows, despite some of the uncertainty around Europe and the potenal forchange in the U.S. polical climate.

In this quarterly Breakdown Report, PitchBook and Merrill DataSite have partnered to explore U.S. private equityinvestment, exits and fundraising with a focus on the trends emerging during 2011. The data and trends from 2011yield a number of interesng observaons:

Despite a challenging second half of the year, U.S. private equity investment in 2011 managed to holdrelavely steady from 2010 overall with 1,630 completed investments totaling $144 billion ofinvested capital.

2011 also saw the connued reemergence of large deals, such as Kinec Concepts and Del Monte Foods.

The percentage of debt used in deals under $1 billion dropped to a ten-year low of 46% in 2011, asPE firms were forced to cope with the combinaon of a tougher debt financing market and an

increase in company valuaon mulples.

Unlike private equity investment, private equity exit acvity was not hit with a slowdown during the second half. Instead, slightly more exits were completed during the third and fourth quarters than

during the first and second. Overall, exit acvity held steady from 2010 with 415 completed sales or IPOs of PE-backed U.S. companies, totaling $107.5 billion in combined deal sizes.

Private equity investors connued to face a challenging fundraising environment, but they alsomanaged to at least hold fundraising acvity steady from 2010 with 142 funds reaching final closeon a total of $93 billion in commitments in 2011.

These highlights are just a few of the data points and trends presented in this report. We hope that you find theinformaon in the following pages helpful in your 2012 private equity endeavors.

Merrill DataSite is a secure virtual data room (VDR) soluon that opmizes the due diligence process by providing a highlyefficient and secure method for sharing key business informaon between mulple pares. Merrill DataSite provides unlimitedaccess for users worldwide, real-me acvity reports, site-wide search, enhanced communicaons through Q&A and superiorproject management service - all of which reduce transacon me and expense. Merrill DataSite's mullingual support staff isavailable around the world, 24/7, and can have your VDR up and running with thousands of pages loaded within 24 hours orless.

With deep roots in transacon and compliance services, Merrill Corporaon has a cultural, organizaon-wide discipline in themanagement and processing of confidenal content. Merrill DataSite is the first VDR provider to understand customer andindustry needs by earning an ISO/IEC 27001:2005 cerficate of registraon the highest standard for informaon security andis currently the world's only VDR cerfied for operaons in the United States, Europe and Asia.

As the leading provider of VDR soluons, Merrill DataSite has empowered nearly 2 million unique visitors to perform electronicdue diligence on thousands of transacon totaling trillions of dollars in asset value. Learn more by vising www.datasite.comtoday.
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With 526 completed deals, Business Products and

Services (B2B) was the most acve industry in 2011, and

it also proved to be the most resilient, maintaining

strong deal flow even through the second half of the

year, including 115 deals that closed during the fourth

quarter. The B2B industry includes the Commercial

Products, Commercial Services and Transportaon

sectors. Commercial Products and Commercial

Services were the most acve last year with 243 and

242 deals, respecvely. (what about subsectors? Could

be interesng to add)

Deal flow in the Healthcare industry gradually dwindled

throughout 2011 to 39 deals in 4Q. In total, 205 Health-

care deals were closed during the year. The deals that did

close, however, were typically larger in size than 2010swith the median size for 2011s deals at $70 million, up

from $41 million for 2010s. The Healthcare industry

includes the Devices & Supplies, Healthcare Technology

Systems, Pharmaceucals & Biotechnology and Services

sectors, the most acve of which in 2011 was Healthcare

Services with 107 deals.

Private equity investors completed 69 investments in

the Consumer Products and Services (B2C) industry

during 4Q 2011, bringing the industrys final count for the

year to 371. The B2C industry includes the Apparel &

Accessories; Consumer Durables; Consumer Non-

Durables; Media; Restaurants, Hotels & Leisure; Retail;

Services (Non-Financial) and Transportaon sectors. The

most acve B2C sectors in 2011 were Consumer Non-

Durables with 76 deals, Consumer Durables with 59 andMedia with 52.

Healthcare

Consumer Products & Services (B2C)

Business Products & Services (B2B)

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Private Equity Deal Flow

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U.S. private equity investment in 2011 was a tale of two

halves: the first being the best six month stretch since 2008

with 966 deal closings, while the second was noceably

slower with only 772 deals. Overall, there were 1,738

completed U.S. private equity investments, totaling $147

billion of invested capital in 2011, pung the years deal

acvity close to that of 2010s and well above the 2009 lows.

Also holding relavely steady with last years acvity were

exits and fundraising. Deal flow is best looked at by dividing

the year in half. The first half was defined by a stunning

return of available leverage and a recovering economy,

leading to two of the best quarters in terms of PE deal flow,

exits and fundraising since the failure of Lehman Brothers.

The second half was defined by macro uncertaines

generated by discordance in Washington and a spiraling out of control European debt crisis, that combined with other

elements to cause banks to pull back financing for deals and PE investors to slow the pace of new investments.

During the year the middle-market connued to be the most acve area of investment for private equity, with deals under

$500 million accounng for over 80% of deal flow. A large part of this was driven by yet another year of record-breaking add-on

acvity. One of the more interesng trends that occurred during the year was the drop in leverage used by private equity firms

to finance middle-market buyouts. Debt as a percentage of deal size declined from 57% last year to a decade low of 46% this

year, resulng in investors being forced to put in not only a larger share of equity to get deals closed, but larger equity checks

in general as valuaon mulples were also on the rise during the year. As the economy connues to improve and private equity

firms work to invest their $425 billion of dry powder look for deal acvity to pick back up again in 2012.

U.S. Private Equity Deal Flow by Quarter

U.S. Private Equity Deal Flow by Year



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PE Investments by Region

Private equity investment connues to be relavely spreadout across the U.S. The Midwest again led the country as the

most acve region in 2011, accounng for 21% of the yearsacvity. Although the Southeast saw a drop in its share to16% in 2011 from 19% in 2010, it connued to be the secondmost acve. The regions that experienced a relave increasein investment acvity from 2010 to 2011 were the MidAtlanc, Northeast, South and Southwest.

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Business Products and Services (B2B) remained the mostacve industry for private equity investment in 2011 with a22% share of the years acvity, up two percentage pointsfrom its share of 2010s acvity. The next most acveindustry was Consumer Products and Services (B2C) at 23%of deal flow, followed by Informaon Technology (IT) at 13%and Healthcare with 12% of last years acvity. Like B2B, the

B2C and IT industry also saw relave increases in theirinvestment acvity from 2010 to 2011.

PE Investments by Industry

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58%

7%

6%

1%

-7%

-8%

-17%

-22%

Southwest

Mid Atlanc

South

Northeast

Westcoast

Midwest

Southeast

Mountain

Changes are based on numbers of deals compared to 2010

58%

7%

6%

1%

-7%

-8%

-17%

-22%

Business Products and Services (B2B)

Informaon Technology

Consumer Products and Services (B2C)

Healthcare

Materials & Resources

Energy

Financial Services

Changes are based on numbers of deals compared to 2010

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PE Transactions (Count) by Deal Size

PE Transactions ($ Amount) by Deal Size

With increased compeon for target companies, private equity

firms sing on $425 billion of dry powder and leverage for large

deals once again plenful, several large private equity deals closedduring 2011. Accompanying an increase in their share of deal flow,

the percentage of capital invested through large deals increased in

2011, with deals over $500 million accounng for 73% of the capital

invested. Billion dollar deals alone accounted for over half (55%) of

the capital invested during 2011, up from 43% the year before and

35% in 2009.

2011 saw a small increase in the percentage of deal flow

accounted for by billion dollar deals, but for the most part, the

distribuon of deals across the different size buckets mirrored

the distribuon in 2010. Deals of at least $1 billion accounted for

7% of all of the investment deals in 2011, up from 5% in 2010 and2% in 2009. However, small and middle-market deals connued

to dominate deal flow with deals under $500 million accounng

for 85% of the acvity last year.

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The difference between the leverage used in deals under $1 billion versus deals over $1 billion widened in 2011 to 15% of deal size.

This was not a result of increased leverage in deals over $1 billion, which connues to hover around the 60% mark just as it has since

2008, but of a drop in leverage used by buyouts under $1 billion from 57% in 2010 to a ten-year low of 46% in 2011. While smaller

and middle-market deals generally have less access to leverage, this challenge has become exasperated by uncertainty in the debt

markets, and as a result, PE investors have become even more reliant on equity to finance deals. On top of that, as shown above,

mulples are at almost all-me highs, requiring PE firms to put in not just higher percentages of equity but larger equity checks as

well.

Debt Percent Used in PE Buyouts

Source: PitchBook



Private Equity Buyout Purchase Price Multiples (Deal Size/EBITDA)

Buyout mulples increased for the second straight year with 2011s median total deal size (roughly equivalent to enterprise value)

to EBITDA mulple coming in at 9.05x. The beak out between debt and equity shows the median buyout was financed with debt

equal to 6.2x EBITDA and equity worth 2.8X EBITDA. Mulples differ broadly across company sizes and industries, for example the

mulple for deals under $500 million in 2011 was 8.3x with a debt to EBITDA mulple of only 3.9x. One trend that is consistent

across all deals sizes though is the fact that mulples in 2011 had climbed back up to near all-me highs set in 2008. A number of

factors have combined to create this trend, chief among them is the increased compeon from strategics with bulging balance

sheets and a strong desire for growth, acquisive or organic, in todays low growth economy. Also driving up mulples is

compeon from other buyout firms, which collecvely have $425 billion of equity to invest over the next few years. Considering

these dynamics and the recovering economy, it is hard not believe that mulples will keep rising into 2012.

Source: PitchBook

EBITDAMultple


8/17



Source: PitchBook

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Private equity investors have been more aggressively pursuing acquisive growth as a means to increase the value of their exisng

porolio companies by taking advantage of opportunies in todays market for consolidaon and expansion. PE-backed companies

acquired 656 companies last year. These add-on acquisions represented 50% of all private equity buyouts during the year, up from

47% in 2010. This trend of increasing add-on acvity goes all the way back to 2003, when they accounted for just over 35% of buyout

deals. In total, PE firms and their porolio companies spent over $25 billion on add-on acquisions last year, almost double 2010s

total and third highest on record. The median add-on deal size for the year was $80 million, showing most of these deals to be for

smaller and mid-sized companies that will provide a boom line impact but that can be added together in plaorms or to exisng

porolio companies without too much trouble. The most acve sectors for add-ons during 2011 were Commercial Services (106

add-ons), Commercial Products (86), Soware (62) and Healthcare Services (56).

Private Equity Add-on Activity
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With 565 completed deals, Business Products and Services (B2B)

was the most acve industry in 2011. It also proved to be the

most resilient, maintaining strong deal flow even through thesecond half of the year, including 140 deals that closed during the

fourth quarter. The B2B industry includes the Commercial

Products, Commercial Services and Transportaon sectors.

Commercial Products and Commercial Services were the most

acve last year with 259 and 258 deals, respecvely. On a more

granular level, B2B subsectors were led Media & informaon

Services with 62 deals, followed by Industrial Supplies & Parts

(56) and Distributors/Wholesale (41).

Deal flow in the Healthcare industry gradually dwindled

throughout 2011 to just 44 deals in 4Q. In total, 218 Healthcare

deals were closed during the year. The deals that did close,

however, were typically larger in size than 2010s with the median

size for 2011s deals at $61 million, up from $41 million for 2010s.

These larger deals help drive the healthcare industry to its best

year since 2008 in terms of invested capital at a total of $28.43

billion. The Healthcare industry includes the Devices & Supplies,

Healthcare Technology Systems, Pharmaceucals &

Biotechnology and Services sectors, the most acve of which in

2011 was Healthcare Services with 116 deals and $14.23 billion of

capital investment.

Business Products & Services (B2B)

Healthcare

Consumer Products & Services (B2C)

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Private equity investors completed 75 investments in the

Consumer Products and Services (B2C) industry during 4Q

2011, bringing the industrys final count for the year to 381. In

terms of invested capital, it was the B2C industry that led

private equity in 2011, with $33.66 billion worth of PE deals.

This was driven by the resurgence of large deals in the space

such as Del Monte Foods, J. Crew and B.J.s Wholesale Club. The

B2C industry includes the Apparel & Accessories; Consumer

Durables; Consumer Non-Durables; Media; Restaurants, Hotels& Leisure; Retail; Services (Non-Financial) and Transportaon

sectors. The most acve B2C sectors in 2011 were Consumer

Non-Durables with 79 deals, Consumer Durables with 59 and

Media with 52.

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10/17

Investment acvity in the Informaon Technology (IT) industry

had a strong start to 2011 before slowing down during the second

half of the year. The IT industry includes the Communicaons &Networking, Hardware, Semiconductors, Services and Soware

sectors. Forty-three IT deals were completed during the fourth

quarter, bringing the total number of deals in the industry to 223

for 2011. The Soware sector accounted for 52% of that total

count, making it 2011s most popular IT sector. Invested capital

was up in 2011, totaling $25.82 billion, making it the best year

since 2007 and beer than 2009 and 2010 combined. With deal

flow flat from 2010 this increase in investment was driven by

larger deals, as shown by the growth in median deal size from $27

million in 2009 to $43 million in 2010 to $110 million in 2011.

The Energy industry experienced solid deal flow during the first

three quarters of 2011, but the acvity drascally slowed down

at the end of the year with only 17 deals being completed during

the fourth quarter. In total, 114 deals were completed in the

industry during 2011, a 17% drop from last year. Capital invest-

ment totaled $24.96 billion during the year, double what it was in

2009 and almost 50% more than last year. The energy industry

includes the Equipment; Exploraon, Producon & Refining;

Services and Ulies sectors. The Exploraon, Producon &

Refining sector led the industrys acvity in 2011 with 48 deals,

followed by the Energy Services sector with 44 deals.

Private equity investors completed 154 deals in the Financial

Services industry last year, 26 of which were closed during the

fourth quarter. The median size for all of last years deals was

$100 million, up from $85 million for deals in 2010. Despite this

increase, the industry turned in its worst year since 2004 in

terms of invested capital with only $6.4 billion. This was largely

the result of there being no mega deals, and only two deals over

$500 million during the year. The Financial Services industry

includes the Capital Markets/Instuons, Commercial Banksand Insurance sectors. The most acve sector in the industry

during 2011 was Insurance with 58 deals.

Information Technology

Energy

Financial Services

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11/17

Private Equity Exit Activity

Median Exit ($)Percent of Exits (Count) by Deal Type

The median exit size for company sales (excludes IPOs) was thesecond highest on record at $237 million, just below 2010s recordof $248 million. Corporate acquision exits did set a new recordthough, with a median deal size of $240 million in 2011. This is a signthat PE firms are taking advantage of the same bulging corporatecash balances and of the compeon in the market they face on thedeal side to both sell larger companies and at higher mulples.

The mix of exits between the three common exit strategies heldclose to 2010s and long-term averages at 57% corporateacquisions, 36% secondary buyouts and 7% IPOs. Despite theincreased aenon received by secondary buyouts during theyear, there was no noceable increase in buyout firms sellingcompanies to other buyout firms. There were 30 total IPOs ofPE-backed companies during 2011. In total these companiesraised $16.9 billion in their IPOs.

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Private equity exit acvity held steady throughout 2011 with 420 completed sales or IPOs of PE-backed U.S. companies, totaling $108billion in combined deal size. Exit acvity avoided the second half slowdown seen in private equity investment with slightly more exits

completed in the third and fourth quarters (101 and 112 respecvely) than in the first and second quarters (96 and 111 respecvely).Sales to strategic acquirers (corporate acquisions) connued to be the most common method for PE firms to exit their investments,with 240 such exits in 2011 totaling over $78 billion. Exits, however, connue to trail the number of new private equity investments bya significant margin, in 2011 it was by about a 2-to-1 margin. Look for the connued pressure of aging private equity poroliocompanies to drive a pick-up in exit acvity during 2012.

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12/17

Private Equity FundraisingU.S Private Equity Fundraising by Year

U.S Private Equity Fundraising by Quarter

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The U.S. private equity industry connues to face significant

headwinds on the fundraising front, especially with its current

$425 billion capital overhang. In 2011 fundraising managed toat least hold steady with 141 funds reaching final close on a

total of $93 billion in commitments, close to 2010 levels but sll

less than half of what it was in the peak years of 2006 through

2008. Fundraising connues to be led by middle-market

focused funds ($250 million to $5 billion), which raised a

combined $87.04 billion, 90% of PEs total for the year. By fund

type, buyout funds saw the most closings in 2011 with 84,

followed by mezzanine funds (16), growth funds (8) and

Restructuring/Distressed funds (7). There were a few bright

spots in 2011 that might signal beer acvity ahead, such as a

reducon in the average fundraising me from almost 19

months in 2010 to 16 months in 2011, as well as the spike in percentage of fundraising made up by firms raising their first fund

to 30%, the highest since 2004.

2012 looks to be another tough year for fundraising, though, as commitments to the industry are unlikely to rise unl the

capital overhang is reduced further and distribuons increase. However, there are 409 funds currently fundraising or planning

on starng in 2012 that combined are targeng tens of billions of dollars. If even half of these reach a final close in 2012, it

would be a markedly beer year than 2011. Should the private equity industry fundraising market begin to turn around, look

for the number of funds in the market to spike as the pent up demand for funds, which the slow fundraising environment has

created, come to market.

Source: PitchBook

Source: PitchBook



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13/17

Average Fund Size ($M) Average Months to Close

1-877-2


Fund Count by Fund SizeFirst Time Funds

In 2011 the average U.S. private equity fund closed on $776.9

million, an increase of almost $100 million from 2010 and the

fih highest average on record. The increase marks the end of

a two-year slide in average fund size that began with the

financial crisis in 2009. There were no mega-funds that hit a

final close in 2011, but with 25 funds closing over the $1

billion mark during the year, there appears to sll be is sll a

fairly strong interest from limited partners in larger PE funds.

One year and four months was the average me it took for

funds closed in 2011 to reach their final close from when they

first began fundraising, a three month reducon from 2010s

18.8 month fundraising period and only two months longer

than the seven year-average. For the firms that have a history

of outperformance, a clear investment focus, and reasonable

targets were able to raise funds much quicker than the 16

month average, with 17 doing so in less than a year.



Source: PitchBook


Source: PitchBook

30% of the U.S. private equity funds that held final closes

during 2011 were first-me funds (the first formal fund raised

by a PE firm). These 43 first-me funds represent the highest

total since 2008 and the highest percentage of fund closings

since 2004. It is worth nong, though, that first me funds are

usually modest in size; combined, this years first-me funds

raised just $12.4 billion with a median fund size of $141 million.

NumberofMonths
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14/171-877-2




Selected Open Funds

Fund

American Securies Partners VI

KKR - North American XI Fund

Aurora Equity Partners IV

WLR Recovery Fund V

Providence Equity Partners VII

Incline Equity Partners III

Sigma Opportunity Fund II

High Street Capital IV

Parthenon Investors IV

Spell Capital Partners Fund IV

Investor

American Securies

Kohlberg Kravis Roberts

Aurora Capital Group

W.L. Ross & Co

Providence Equity Partners

Incline Equity Partners

Sigma Capital Partners

High Street Capital

Parthenon Capital Partners

Spell Capital Partners

Target Amount ($M)

3,500

10,000

900

2,400

6,000

300

100

100

600

40

Largest Closed Funds

Fund

Berkshire Fund VIII

Centerbridge Capital Partners II

Golden Gate Capital Opportunity Fund

Trident V

ArcLight Energy Partners Fund V

GTCR Fund X

OCM Opportunies Fund VIIIb

Gores Capital Partners III

Avenue Special Situaons Fund VI

Francisco Partners III

KSL Capital Partners III

ABRY Partners Fund VII

Insight Venture Partners VII

Siguler Guff Distressed Opportunies Fund IV

TSG Consumer Partners VI

Investor

Berkshire Partners

Centerbridge Partners

Golden Gate Capital

Stone Point Capital

ArcLight Capital Partners

GTCR Golder Rauner

Oaktree Capital Management

The Gores Group

Avenue Capital Group

Francisco Partners

KSL Capital Partners

ABRY Partners

Insight Venture Partners

Siguler Guff & Company

TSG Consumer Partners

Amount ($M)

4,500

4,400

3,500

3,500

3,300

3,250

2,667

2,064

2,000

2,000

2,000

1,600

1,500

1,300

1,300


15/17

By Number of Closed Investments

Most Active Private EquityInvestors in 2011

The Blackstone Group

The Carlyle Group

GS Capital Partners

Kohlberg Kravis Roberts

TPG Capital

Apax Partners

Audax Group

The Riverside Company

Genstar Capital

H.I.G. Capital

Planum Equity

Warburg PincusBain Capital

GTCR Golder Rauner

Vista Equity Partners

Morgan Stanley

Parthenon Capital Partners

Stone Point Capital

Hellman & Friedman

Investcorp

Sun Capital Partners

Golden Gate Capital

Oak Hill Capital Partners

Oaktree Capital Management

Ridgemont Equity PartnersThomas H. Lee Partners

Clayton Dubilier & Rice

JMI Equity

The Gores Group

ABRY Partners

Cerberus Capital Management

General Atlanc

Kayne Anderson Capital Advisors

Moelis Capital Partners

Silverhawk Capital Partners

TA Associates

Welsh Carson Anderson & Stowe

Apollo Global ManagementClearview Capital

Great Point Partners

Lightyear Capital

LLR Partners

Pfingsten Partners

Providence Equity Partners

Silver Lake Partners

Spring Capital Partners

Wind Point Partners

Deal Count

24

24

22

21

21

19

19

18

15

15

15

15

14

14

14

13

13

13

12

12

12

11

11

11

1111

10

10

10

9

9

9

9

9

9

9

9

88

8

8

8

8

8

8

8

8

2 by number of advisory roles in closed transacons

3 by number of financings provided

1 by counsel provided on closed transacons

Most Active Private EquityService Providers in 2011By Number of Deals Serviced

Investor Name

1-877-2





Top Law Firms in Private Equity1

Kirkland & Ellis

Jones Day

Latham & Watkins

Weil Gotshal & Manges

Simpson Thacher & Bartle

Skadden Arps Slate Meagher & Flom

Paul Weiss Riind Wharton & Garrison

Davis Polk & Wardwell

Goodwin Procter

Morgan Lewis & Bockius

Ropes & Gray

Wachtell Lipton Rosen & Katz

Top Investment Banks & Advisors2

Morgan Stanley

Barclays Capital

Bank of America Merrill Lynch

Lincoln Internaonal

JP Morgan

William Blair & Company

Goldman Sachs

UBS

Moelis & Company

Houlihan Lokey Howard & Zukin

Credit Suisse

Robert W Baird

Top Lenders in Private Equity3

GE Capital

Madison Capital Funding

Bank of America Merrill Lynch

Wells Fargo

JP Morgan

Fih Street FinanceGoldman Sachs

Barclays Capital

Deutsche Bank

Golub Capital

Morgan Stanley

Credit Suisse

Fih Third Bank


16/17

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