According to information provider Preqin, 2,830 deals were announced throughout 2013, with an aggregate value of $274bn, the highest value since $661bn worth of deals were announced in 2007. But although the value of buyout investments has been the highest since 2007, the number of deals has fallen by 11% from 2012.
“2013 has seen notable growth in deal-making activity for the private equity industry. Although the number of deals being made has dropped compared to 2012, the aggregate value of deals that took place is at its highest point since before the global financial crisis," according to Ignatius Fogarty, head of private equity products at Preqin.
He added that with exit activity also buoyant, particularly for the IPO market, and fundraising experiencing notable gains, 2014 looks set to be a very positive year for the industry.
The exit environment in 2013 has improved, with the largest number of private equity-backed exits taking place since 2009, reflecting an aggregate exit value of $303bn.
Europe vs North America
Deals in Europe decreased by 4% from 2012 to 2013, while aggregate deal values increased 6% over the same period. This is largely due to the average deal size increasing from $203mn in 2012 to $227mn in 2013.
On the other hand, North America saw its strongest year since 2007 in terms of the value of buyout deals. A total of 1,516 deals valued at $171bn were reported, a 10% increase compared to 2012.
Emerging markets, however, are still lagging behind their more successful regional counterparts.
"While there have been strong deal levels in developed economies such as Europe and North America, there has been a significant drop off since 2011 in the value of deals taking place in Asia and other emerging markets. This trend is reflected in fundraising figures, demonstrating that both investors and fund managers are becoming more risk averse," Fogarty said.
Leveraged buyouts
In 2013, leveraged buyouts represented 38% of all deals. This is 43% of the aggregate value of deals globally during the year, down from 59% in 2012. This was predominantly due to investments in IT giant Dell and condiment producer H.J. Heinz, which meant public-to-private deals accounted for 31% of aggregate deal value in 2013.
