Global PE deals near $500bn mark

Private equity-backed M&A increased markedly in 2005 with Europe seeing the lion’s share of deal volume.

Global sponsor-backed M&A reached a record volume of $493.8 billion ($416 billion) in 2005, representing 17 percent of total announced M&A volume. It was also an 18 percent increase on 2004 volumes, according to data provider Dealogic.

Europe generated more sponsor-backed M&A volumes than the US in 2005, with total volume of $232.5 billion compared to $217.9 billion for the US. Both figures represent increases on 2004 total volumes of 30 percent and 13 percent respectively.

In sector terms, telecommunications saw the highest volume of any industry with $78.7 billion, a 114 percent increase on the previous year. A substantial proportion of this came from the $15.6 billion acquisition of Denmark’s TDC by Apax, Permira, Blackstone, KKR and Providence Equity Partners, Europe’s largest ever buyout.

After TDC, the two other €10 billion plus deals in 2005 took place in the US. These were the $15 billion buyout of rental car giant Hertz by Clayton Dubilier & Rice, The Carlyle Group and Merrill Lynch Global Private Equity in September; and the $11.8 billion buyout of technology group SunGard Data Systems by Silver Lake Partners, Kohlberg Kravis Roberts, Bain Capital, Blackstone Group, Goldman Sachs Capital Partners, Providence Equity Partners and Texas Pacific Group.

In total, there were 114 LBOs valued at $1 billion or over, an all time record according to Dealogic. The number of deals valued between $100 million and $1 billion was 552, slightly down on the 600 announced in 2004.

Globally, sponsor-led acquisitions reached $338.4 billion, a 40 percent increase on 2004 volume. 129 companies were taken private by private equity firms in total, for an aggregate value of $103.4 billion.

Private equity exits amounted to $272 billion, with the return of trade buyers pushing sales to $111.4 billion, up 104 percent from $54.6 billion in 2004. Secondary buyouts also increased in 2005, rising from 64.1 billion in 2004 to $90.6 billion this year.

Goldman Sachs topped the table for sponsor-backed M&A advisor revenue rankings in 2005, earning $247.3 million, a 7 percent increase on last year. CSFB came in second place with $196.1 million, followed by JP Morgan; Citigroup; UBS; Morgan Stanley; Lehman Brothers; Deutsche Bank; Rothschild; and Merrill Lynch.