8 charts on the global private equity deals landscape

Global strategic consulting firm Bain & Company has released its ‘Global Private Equity Report’ for 2021 – its annual study into trends in the worldwide private equity deals landscape. Eight charts summarising the report’s key findings. 

Buyouts

Global buyout deal value in 2020 ended the year at $592 billion, an 8% jump from 2019’s performance and 7% higher than the five-year average of $555 billion. However, Covid-19 did have a pronounced negative impact on global deal count, as the number of buyouts fell 24% to around 3,100 in 2020, from 4,100 in 2019. 

The broad technology sector attracted the most private equity investment in 2020 (29% of total buyout deal count globally, 32% including fintech), with several subsectors standing out. The financial sector also drew significant private equity interest despite the slumping economy. 

Buyouts are still the industry’s single largest category of assets under management, but their share of assets is shrinking. Buyout funds held 41% of global private equity AUM in 2020, down from 62% in 2010. Investors piling into categories like growth, venture capital and distressed assets have powered 17% annual growth in non-buyout alternatives since 2010, building to an estimated $2.4 trillion in AUM by the end of 2020. 

Global uncalled capital has been stacking up for almost a decade, and going into 2021, buyout dry powder reached a record level of $2.9 trillion. However, there is according to Bain & Company little evidence to suggest that buyout funds are under undue pressure to put money to work. “Dry powder is an issue but not a cause for alarm,” write the authors.

Exits

The number of exits trailed 2019’s total, but owing to an increase in deal size, global exit value hit $427 billion in 2020, on par with 2019 and in line with the five-year average.

Strategic buyers provided the largest exit channel. Sponsor-to-sponsor deals held up well, and initial public offerings increased by 121% to $81 billion as public equity markets soared. Firms also leaned heavily on partial exits, as investors sought to keep a stake in attractive assets rather than have to hunt down new prospects in a highly competitive deal market.

Overall, the median holding period for companies exited in 2020 was 4.5 years, slightly higher than in 2019 but in line with the five-year average. 

Fundraising

Global fund-raising of $989 billion was a decline from 2019’s all-time record of $1.09 trillion. But it was still the third-highest total in history, and if the $83 billion raised for SPACs is added, it was the second highest.

Fewer funds closed overall, but those that did skewed large. On average, funds seeking $5 billion or more in assets closed within six months and 18% above their initial target. By contrast, smaller funds with experience took an average of 14 months to close.

2021 outlook

Commenting on the outlook for 2021, Hugh MacArthur, global head of Bain & Company’s Private Equity practice said: “With the number of deals down in 2020 from recent levels, we expect to see a lot of pent-up demand returning to the market. Add to that soaring levels of dry powder and robust markets and 2021 is shaping up to be incredibly busy.”