Actionable Ideas for Companies and Sponsors

The Trend in Larger Take-Privates Is Gaining Significant Momentum

Capital concentration among the larger private equity funds is leading to both increased activity and increased deal size in take-privates. In 2018, the ten largest private equity funds raised $125 billion, almost a quarter of the PE capital raised, and these private equity firms are looking for larger deals in the public universe as a means of investing the large sums they need to put to work. In addition, the return requirements of private equity funds are steadily declining due to the excess supply of funds and new competitors, including pension funds, requiring lower IRRs. This has resulted in the willingness of PE funds to pay higher prices. Finally, the leverage finance new issue market remains open for highly leveraged transactions, enabling private equity funds to more effectively compete against strategics. The result of these trends is that in 2018 and 2019 YTD globally, there were 84 take-private transactions announced, and the median deal value has risen to $1.2 billion.