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Breakdown 3Q 2010
During the first half of 2010, U.S. private equity investment, exit and fundraising activity all increased, putting private equity on
the path to recovery from its lows a year ago. For the first half of 2010, there were 655 completed PE deals, totaling over $48
billion, an improvement over both 2H 2009 and 1H 2009, but still far from the levels seen during the years before the credit crisis.
During the second quarter, over $30 billion was invested by private equity investors in 295 PE deals, a decrease in deal flow of 18%
from 1Q 2010 but an increase of $12 billion in capital invested. The middle-market ($50 million to $1 billion) continues to repre-
sent the majority of private equity investment, accounting for over half of the deals so far in 2010. One interesting trend develop-
ing in the middle market is an increase in larger deals and a falloff in smaller deals. Those between $500 million and $1 billion
doubled their share of deal flow from an average of 4.5% to almost 11% so far in 2010. Small-cap and lower middle-market deals
dropped during 1H 2010 to about 41% of PE deal flow, compared to 60% in 2009 and a long term average of 52%.
A number of positive trends that began last quarter continued during the second quarter, including an encouraging rise in valua-
tions and deal amounts. The median private equity investment jumped from $50 million last quarter to $120 million this quarter,
driven by a returning appetite for larger deals coupled with the increased availability of debt. One trend that limited partners and
PE firms themselves are certainly happy to see is the fifth straight quarter-over-quarter increase in exit deals. There were 100
completed during the quarter, the most since 3Q 2008, generating over $25 billion in total proceeds. The first half of 2010 laid
down a solid foundation of deal flow and exit activity for investors to build upon through the second half of the year as the indus-
try works through its current $400 billion capital overhang and portfolios of mature investments.
Source: PitchBook
There were 655 completed U.S. private equity deals, totaling $48 billion, during 1H 2010.
2Q 2010 deal flow rose 4% from 2Q 2009 and total invested capital rose by 328%.
PE investment during 1H 2010 was less than half of what it was at the peak in 1H 2007.
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PE Tr ansactions PE Tr ansactions
by Industry Sector In 2Q 2010 by Region In 2Q 2010
Business Products and Services continues to be the top industry for Investments in the Midwest region jumped from 15% of deal flow in 1Q
private equity investment, accounting for 31% of 2Q deal flow. Private to 23% in 2Q, while activity in the Southeast dropped from 24% to 16%.
equity investors are turning bullish on the Consumer Products and For the rest of the United States, investment levels remained relatively
Services industry though, pushing up its portion of deal flow by 7% to similar to long-term averages.
represent 26% of the quarter’s investments. Materials & Resources
was the only other industry that saw a gain during the quarter with the
Energy industry holding steady and the rest declining.
Deals in between $50 million and $250 million saw a significant increase The middle market ($50 million - $1 billion) continues to represent the
during 1H 2010 to account for 38% of deal flow, its highest percentage in majority of PE investment, accounting for $30 billion of the $48 billion
the last seven years. Deals under $50 million, with only 85 deals in 1H invested so far this year. The upper middle-market deals between $500
2010, represented its smallest portion of deal flow since 2003, due million and $1 billion saw a big jump in 1H 2010 and are on pace to see
partially to difficulties in finding financing for smaller-sized companies. the third highest amount of capital invested ever.
Source: PitchBook
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No mega funds (over $5 billion) have closed so far in 2010, but fundraising Almost 70% of the total capital raised by U.S. PE firms during 1H 2010 was
for middle-market funds has been fairly strong. This robust middle-market by funds in the $1 billion to $5 billion size range. At an average size of $2.5
fundraising is likely due to investors’ current preference for funds targeting billion, these funds are raising more money on average than they ever
reasonably-sized deals capable of closing today. The space that is currently have in the past as limited partners shift their focuses from the
experiencing difficulty with fundraising is the $100 million to $250 million mega-funds of 2007 to more reasonably-sized funds. At just over 10% of
range with only 3 fund closings in 1H 2010. total capital raised, funds from $250 million to $500 million are also
experiencing a strong 2010.
*Through ²Q ²⁰¹⁰
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Most Active Private Equity Investors Most Active Private Equity Service
in 1H 2010 Providers in 1H 2010
By Number of Investments By Number of Deals Serviced
Investor Name Deal Count
The Blackstone Group 11
Top Law Firms in Private Equity1
H.I.G. Capital 10
Jones Day
Stone Point Capital 9
Kirkland & Ellis
The Carlyle Group 9
Latham & Watkins
Lightyear Capital 8 Morgan Lewis & Bockius
Apollo Global Management 7 Weil Gotshal & Manges
Golden Gate Capital 7 Skadden Arps Slate Meagher & Flom
Sun Capital Partners 7 Sullivan & Cromwell
Warburg Pincus 7 Kaye Scholer
Ares Management 6 Paul Weiss Rifkind Wharton & Garrison
Catterton Partners 6 Ropes & Gray
Metalmark Capital 6 1 by counsel provided on transactions
Riverstone Holdings 6
The Riverside Company 6
Thoma Bravo 6
Top Investment Banks & Advisors2
Wind Point Partners 6
Imperial Capital
Brazos Private Equity Partners 5 Goldman Sachs
CCMP Capital Advisors 5 Jefferies & Company
Kayne Anderson Capital Advisors 5 Harris Williams & Co.
Marlin Equity Partners 5 JP Morgan
Spire Capital Partners 5 Lazard
Veronis Suhler Stevenson 5 Lincoln International
AEA Investors 4 Robert W Baird
Allied Capital 4 BofA Merrill Lynch
American Industrial Partners 4 Moelis & Company
Arsenal Capital Partners 4 2 by number of advisory roles in transactions
Audax Group 4
Bain Capital 4
Baird Capital Partners 4
Top Lenders in Private Equity3
BlackEagle Partners 4
GE Capital
Court Square Capital Partners 4
Madison Capital Funding
Crestview Partners 4
Fifth Third Bank
Francisco Partners 4 Golub Capital
Hellman & Friedman 4 Amalgamated Capital
Leonard Green & Partners 4 Ares Capital
Oak Hill Capital Partners 4 BofA Merrill Lynch
Platinum Equity 4 GE Antares Capital
Silver Lake Partners 4 Goldman Sachs
Silverhawk Capital Partners 4 Wells Fargo
Summit Partners 4 3 by number of financings provided
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consider and is not to be relied upon as such or used in substitution for the exercise of independent judgment.
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PitchBook researches deal amounts and valuations, target company �inancials and price multiples, capitalization structures, deal terms,
investor information and service provider contact information. It also tracks deal stakeholders and participants – not just �inancial
sponsors and investors, but also the many other �inancial, legal and advisory �irms associated with taking a deal through to completion.
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