Private equity deals and exits totalled $494.1 billion over 1,623 transactions in the first nine months of 2017 compared with $444.4 billion across 1,818 transactions during the same period last year, according to data from Dealogic.
This is the lowest number of transactions recorded in the first nine months of the year since 2003, but the fourth highest value for the period since 2000, indicating an increased average deal size and soaring valuations. In the first nine months of 2007, there were 3,392 transactions totalling $783 billion.
In Europe, the trend was similar, with 683 deals and exits accounting for $151.5 billion over the period, the lowest number of transactions since 2000. Last year, Europe deals accounted for $118.2 billion of spending across 739 transactions.
“There’s long-term growth in private equity, limited supply of opportunities and then secondly there’s a cyclical glut of money resulting from quantitative easing, which compounds that issue. So you’ve got a double whammy,” Peter Gale, managing director of fund of funds Hermes GPE, tells Private Equity International. Assets are currently being valued “quite dangerously”, he adds.
The average EMEA entry deal size stood at €64.6 million between 1 July and 31 August, more than double the €32.2 million in the same period last year, S&P’s EMEA Private Equity Market Snapshot for October noted. Valuations in US private equity transactions as a multiple of EBITDA also reached new highs in the first six months of 2017 at 13.7x, according to an August report from valuation firm Murray Devine.