Buyout boom drives $1.2 trillion quarter(2)

Private equity deal volumes hit nearly $200 billion in the first three months of the year, according to new research.

Another quarter, another record. The first three months of the year saw private equity drive the global mergers and acquisitions market to even greater heights, as $197 billion (€147 billion) of buyout deals boosted the total figure well above the $1 trillion mark.

Another record-breaking quarter 

The numbers, compiled by data provider Dealogic, show that global M&A volume hit $1.21 trillion in Q1, a 23 percent increase on the same period last year. This was due in no small part to the $197 billion of private equity deals announced during the quarter – up a massive 82 percent on the same period in 2006. Buyouts accounted for 16 percent of all M&A activity, compared to 11 percent last year.

The figure is actually even higher if all private equity related activity is taken into account. The total value of all private equity-backed M&A – also including add-ons and exits – was $253.9 billion, an 80 percent increase on 2006.

The overall figure was boosted by the $43.8 billion deal agreed for US utility TXU in February by Kohlberg Kravis Roberts and TPG, which if it completes will be the biggest leveraged buyout to date. As a result of this mega-deal, utility and energy was the sector with the highest volume, topping $50 billion for the quarter for the first time thanks to 15 deals.

In fact, KKR accounted for three of the biggest four deals recorded in the quarter – the number also includes its prospective £10.1 billion deal for UK health and beauty chain Alliance Boots, and the $7.3 billion acquisition of US retailer Dollar General.

KKR’s biggest rival The Blackstone Group was also busy during the quarter – with deals including the $3.3 billion buyout of US-based Cardinal Health, Blackstone paid out $75 million in advisory fees, more than any other firm. 

Inevitably Goldman Sachs reaped the greatest rewards, topping the global advisory rankings. It was involved in buyout deals totalling $114.5 billion during the quarter.

Both Europe and the US saw a huge increase in deal volume. US volume hit $122 billion, a 95 percent increase on the previous year, while European volume was up 77 percent to $63.3 billion. Over half of this total came from UK deals, which accounted for a massive $35.2 billion – more than eight times the equivalent number for 2006.