PE deal flow trends

Building on my piece from a few weeks ago, when I examined M&A deal flow trends, I want to look at another component of the M&A market: Private Equity. To reiterate, I wrote the earlier piece to examine if the actual data backs up the media’s widespread assertion that there has been a decrease in corporate takeovers in 2016. The findings were less convincing that one might have expected: the number of deals is down, but the cumulative value of the deals is not (meaning that the deals being completed are larger than before).

The private equity market, excluding the largest and flashiest deals, does not get as much media coverage as the corporate M&A market. As such, I do not know if others are taking PE deal flow trends into account when they discuss M&A trends. In any case, I looked at the last 12 months to see what trends can be found:

6.7.16 pe # of deals

In this first chart, I’ve compared the overall number of deals from the last 12 months compared to the last 3 months as well as the last month (multiplied by 4 and 12, respectively, to annualize those amounts). While this does not account for any seasonal fluctuations, it is pretty clear that deal flow is down in recent months relative to the last 12 months.

6.7.16 pe deal size

Unlike the corporate takeover data, things are a little more consistent with PE. In addition to the number of deals decreasing, the total deal value is likewise down over the past year (looking at annualized data levels). While equity amounts have increased looking at the past month (annualized), on the whole it appears as though both the quantity and size of PE deals has fallen over the last 12 months, reinforcing the media’s hypothesis on the state of the takeover market.

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