Private Equity Trends 1Q 2012
Presentation Slide Deck
Try the PitchBook Platform:
Email: demo@pitchbook.com
Phone: 1-877-267-5593
Consult the Research Team:
Email: research@pitchbook.com
Phone: 1-877-636-3496
The PitchBook Platform
REQUEST A DEMO:
demo@pitchbook.com
1-877-267-5593
Source:PitchBook
Private Equity
Deal Flow
2011 PE Investment Above 2009 Lows
Number of Deals Closed (red line) and Total Capital Invested by Year (blue bars)
$600
3,500
3,040
$571
3,000
$500
2,517
2,500
2,228
$400
2,032
1,828
1,686
$300
1,393
1,738
$305
2,000
1,500
1,225
$200
843
$100
$161
$126
$62
$40
2002
$147
500
$83
$0
1,000
$196
$174
0
2003
2004
2005
2006
Capital Invested ($B)
2007
2008
2009
# of Deals Closed
2010
2011
Source:PitchBook
2011: The Year of Two Halves
Number of Deals Closed and Total Capital Invested by Quarter
$250
900
796
752 737
$204 721
755
$200
800
700
650
646
587
613
$144
608
$150
559
$130
520
$120
$103
400
348
$100
$76
$71
443
399
482 484
416
$41
500
411
361
324 322
410
$71
$44
$39
$27
$15 $15
$8 $12
$31
400
300
$68
$58
$50
600
$38 $36 $34 $39
$18
200
100
$0
0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2006
2007
2008
Capital Invested ($B)
2009
# of Deals Closed
2010
2011
Source:PitchBook
Midwest Led PE Deal Flow with 360 Deals
Percentage of Deal Volume (count) by Region
2011
West Coast
Mid Atlantic
11%
15%
2010
2%
Southwest
16%
10%
Midwest
1%
21%
16%
21%
19%
Southeast
6%
14%
16%
South
Mountain
13%
5%
14%
Northeast
Source:PitchBook
B2B and B2C Dominate PE Deal Activity
Percentage of Deal Volume (count) by Industry
Materials &
Resources
Information
Technology
2011
5%
13%
2010
5%
12%
Healthcare
12%
32%
Business
Products &
Services (B2B)
30%
13%
10%
Financial
Services
8%
9%
7%
Energy
22%
22%
Consumer
Products &
Services (B2C)
Source:PitchBook
B2B and B2C Deal Flow Increased in 2011
Percentage of Deal Volume (count) by Industry
100%
Business Products &
Services (B2B)
90%
Consumer Products &
Services (B2C)
80%
70%
Energy
60%
50%
Financial Services
40%
Healthcare
30%
20%
Information
Technology
10%
Materials &
Resources
0%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source:PitchBook
Capital Investment Continued Shift to IT, Healthcare & Energy
Percentage of Deal Volume (capital) by Industry
100%
Business Products &
Services (B2B)
90%
Consumer Products
& Services (B2C)
80%
70%
Energy
60%
50%
Financial Services
40%
Healthcare
30%
20%
Information
Technology
10%
Materials &
Resources
0%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source:PitchBook
Deals Under $250M Accounted for 75% of Deal Flow
Percentage of Deal Volume (count) by Deal Size Range
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2004
2005
Under $50M
2006
$50M-$250M
2007
$250M-$500M
2008
$500M-$1B
2009
2010
$1B-$2.5B
2011
$2.5B+
Source:PitchBook
Large Deals Attracted More Capital Investment
Percentage of Deal Volume (capital) by Deal Size Range
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2004
2005
Under $50M
2006
$50M-$250M
2007
$250M-$500M
2008
$500M-$1B
2009
2010
$1B-$2.5B
2011
$2.5B+
Source:PitchBook
Add-ons Continue to Sweeten Deals
Add-on Deals as Percentage of Buyout Deals
2,500
55%
50%
2,000
46%
1363
1,500
45%
942
38%
712
860
660
1061
500
322
417
198
209
2001
2002
333
40%
519
625
0
47%
1189
983
1,000
50%
468
638
820
35%
745
450
624
656
30%
2003
2004
Add-on
2005
2006
Non Add-on
2007
2008
2009
Add-On % of Buyout
2010
2011
Source:PitchBook
Median Buyout Size Hit New Record
Median Capital Invested in U.S. PE Transactions
$140
$130
$120
$100
$100
$76
$80
$20
$66
$60
$60
$40
$100
$50
$52
$40
$19
$40
$20
$23
$29
$22
$25
$32
$30
$23
$20
$0
2002
2003
2004
2005
2006
2007
Buyout
Growth
2008
2009
2010
2011
Source:PitchBook
Still Low Leverage in the Middle Market
Percentage of Debt Used in Buyouts
75%
71%
70%
65%
67%
67%
63%
61%
60%
55%
55%
56%
50%
62%
57%
56%
57%
57%
56%
52%
52%
61%
59%
51%
49%
45%
46%
40%
35%
2002
2003
2004
2005
2006
Deals Under $1B
2007
2008
2009
2010
2011
Deals Above $1B
Source:PitchBook
Buyout Multiples Finished Close to 2008 High
EBITDA Multiples of Buyout Transactions
10x
9.5
9.0
9x
8.2
2.3
5.9
5.0
3.2
2.8
6.5
2.7
2.9
3.2
2.1
4x
7.6
3x
2x
7.3
3.1
6.9
7x
5x
1.2
7.6
8x
6x
9.1
8.8
5.3
3.8
4.0
2002
2003
6.2
5.9
5.0
4.6
4.4
3.3
1x
0x
2004
Debt / EBITDA
2005
2006
Equity / EBITDA
2007
2008
2009
Total Deal Size / EBITDA
2010
2011
Source:PitchBook
Private Equity
Exits
Private Equity Exits on Par with 2010
Annual PE Exits by Corporate Acquisition, IPO and Secondary Sale
600
510
500
449
434
420
377
400
350
317
300
200
207
184
151
100
2002
2003
2004
2005
2006
Corporate Acquisition
2007
IPO
2008
Secondary Buyout
2009
2010
2011
Source:PitchBook
Exit Strategies Consistent with Long Term Averages
Percentage of P.E. Exit Volume (count) by Exit Type
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2002
2003
2004
2005
2006
Corporate Acquisition
2007
IPO
2008
2009
Secondary Buyout
2010
2011
Source:PitchBook
Private Equity Investors Exited $108B of Investments
Quarterly PE Exits by Corporate Acquisition, IPO and Secondary Sale
180
163
160
143
140
120
100
128
116
113
120 124
123
114
99
92
79 83
79
80
58
60
51
112
111
104
96
101
84
44
33
40
20
0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2006
2007
2008
Corporate Acquisition
2009
IPO
Secondary Buyout
2010
2011
Source:PitchBook
Corporate Acquisitions Dominated Exits
Median Exit Size ($M)
$400
$339
$350
$291
$300
$270
$240
$250
$221
$191
$200
$191
$151
$150
$50
$105
$92
$100
$43
$2002
2003
2004
2005
2006
Corporate Acquisition
2007
2008
2009
2010
2011
Secondary Buyout
Source:PitchBook
PE Exits Likely to Stay Strong in 2012
Number of U.S. Private Equity Company Inventory by Deal Year
7000
US Private Equity Company
Inventory by Deal Year
5,952
6000
Year of
Investment
5,665
Number of PE Backed Companies
5,341
5,064
5000
2009 - 2011
4,483
4000
3,621
2005 - 2008
2,849
3000
2000 - 2004
2,187
2000
1000
0
2004
2005
2006
2007
2008
As of Year
2009
2010
2011
Source:PitchBook
Inventory Buildup Resulted in Increased Holding Length
Median Time from Buyout to Exit
6
5
4.38
# of Years Held
4.37
4.16
3.82
4
3.67
3.57
2006
2007
3.84
3.93
2008
2009
4.68
4.81
2010
2011
3
2
1
0
2002
2003
2004
2005
Median Holding Period
Source:PitchBook
Private Equity
Fundraising
Company Inventory & Capital Overhang Stall Fundraising
Number of Funds Closed and Total Capital Raised by Year
$350
350
314
$300
300
252
261
273
$250
250
$200
200
161
$150
136
142
138
141
150
117
$100
100
$50
50
$0
$79
$44
$90
$142
$224
$313
$312
$152
$89
$93
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Capital Raised ($B)
# of Funds Closed
0
Source:PitchBook
Fundraising Remained Flat
Number of Funds Closed and Total Capital Raised by Quarter
$120
140
123
120
$100
100
$80
80
$60
61
62
47
53
$40
31
32
31
$20
$0
60
46
42
35
27
28
26
32
20
12
$101
$96
$74
$42
$75
$35
$12
$30
$30
$22
$28
$10
$30
$27
$17
$19
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
2008
40
2009
Capital Raised ($B)
2010
# of Funds Closed
0
2011
Source:PitchBook
Funds Under $1B Accounted for 39% of U.S. PE Fundraising
Percentage of U.S. P.E. Funds (capital) by Fund Size
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2002
Under $100M
2003
2004
$100M-$250M
2005
2006
$250M-$500M
2007
2008
$500M-$1B
2009
2010
$1B-$5B
2011
$5B+
Source:PitchBook
Middle Market Funds Dominate Fundraising
Percentage of U.S. P.E. Funds (count) by Fund Size
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2002
Under $100M
2003
2004
$100M-$250M
2005
2006
$250M-$500M
2007
2008
$500M-$1B
2009
2010
$1B-$5B
2011
$5B+
Source:PitchBook
PE Investors Sitting on $425B of Dry Powder
Capital Overhang of US PE Investors by Vintage Year
$140
$600
$114.98
$120
$425
$500
$100
$400
$77.64
$80
$76.11
$67.80
$300
$63.46
$60
$200
$40
$24.22
$100
$20
$0
$ in Billion
$0
2006
Cumulative Overhang
2007
Under $100M
2008
$100M-$250M
2009
$250M-$500M
2010
$500M-$1B
2011
$1B-$5B
$5B+
Source:PitchBook
New GPs are Entering the Private Equity Industry
Number of Funds Closed by Year
350
35%
31%
32%
32%
30%
29%
300
30%
26%
85
250
72
200
25%
62
68
20%
19%
150
15%
51
100
50
44
98
229
37
80
180
193
211
110
36
26
42
10%
100
112
5%
99
0
0%
2002
2003
2004
2005
Experienced GP
2006
2007
First Time GP
2008
2009
% of First Time GPs
2010
2011
Source:PitchBook
Funds are Closing Faster
Average Time to Close U.S. PE Funds
20
19
18
16
Number of Months
16
15
14
14
12
11
11
11
2007
2008
10
8
6
4
2
0
2005
2006
2009
2010
2011
Source:PitchBook
Average 2011 Vintage Fund 13% Larger than 2010
Average Fund Size ($M)
$1,400
$1,277
$1,200
$1,144
$1,070
$1,000
$930
$777
$800
$686
$600
$597
$606
$602
2004
2005
$410
$400
$200
$0
2002
2003
2006
2007
Vintage Year
2008
2009
2010
2011
Source:PitchBook
Greater Private Equity
Performance
PE Led in Average IRR For 7 Consecutive Vintages
Average Fund IRR by Vintage Year and Fund Type
25%
20%
18%
15%
16%
10%
19%
20%
12%
11%
12%
11%
9%
10%
11%
11%
8%
5%
5%
7%
3%
4%
0%
-5%
2000
-2%
2001
2002
2003
2004
-6%
2005
2006
2007
2008
2009
-3%
-4%
-3%
-10%
-14%
-15%
-18%
-20%
Private Equity
Venture Capital
Fund of Funds
Mezzanine
Real Estate
Source:PitchBook
Fund Performances Bounced Back
Median 1-Year Rolling Horizon IRR by Fund Type
30%
21%
21%
19%
20%
16%
14%
13%
11%
10%
2%
0%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
-10%
-20%
-30%
-38%
-40%
-50%
Private Equity
Venture Capital
Fund of Funds
Mezzanine
Real Estate
Source:PitchBook
Private Equity Outperforming in the Long Run
Horizon IRR – Private Equity, Venture Capital and Public Index
35%
32%
30%
25%
20%
19%
15%
12%
10%
10%
6%
5%
3%
3%
4%
0%
1 Year
3 Years
5 Years
-5%
Private Equity
Venture Capital
Russell 3000 ©
Source:PitchBook
Private Equity
Performance
Larger Funds Lead Returns Across Vintages
Private Equity Average Fund IRR by Vintage Year
35%
29%
30%
25%
20%
17%
20%
15%
10%
14%
13%
13%
8%
9%
11%
5%
8%
6%
6%
0%
2000
2001
2002
2003
2004
2005
-5%
2006
2007
2008
2009
-1%
-5%
-6%
-10%
Under $250M
$250M - $1B
$1B+
Source:PitchBook
Larger Funds Recently Yielded Higher Returns
Private Equity Horizon IRR by Fund Size
30%
25%
24%
20%
$5B+
$1B-$5B
15%
$500M-$1B
10%
11%
10%
7%
$250M-$500M
$100M-$250M
Under $100M
5%
0%
1 Year
-5%
3 Years
5 Years
Source:PitchBook
Recent PE Funds Hit Positive IRR in 2010
Median IRR by Years Since First Investment
30%
20%
8.96%
10%
7.11%
5.60%
0%
-5.20%
0
-10%
-20%
1
2
3
4
5
6
7
-5.73%
-8.14%
-7.65%
-15.90%
-17.60%
-30%
2006 Vintage
2007 Vintage
2008 Vintage
Source:PitchBook
LPs Waiting for Distribution for 2003 & Younger Funds
Average Private Equity Return Multiples by Vintage Year
2.5x
2.04
2.0x
1.81
0.39
1.72
1.53
0.34
1.51
0.43
1.5x
1.31
0.57
1.16
1.20
0.93
1.01
1.23
1.11
0.74
1.07
1.0x
1.45
0.88
1.61
1.31
0.5x
0.94
0.0x
2001
2002
2003
1.00
1.00
0.77
0.43
2000
1.00
2004
DPI
2005
RVPI
0.23
0.19
0.23
0.14
0.08
2006
2007
2008
2009
2010
TVPI
Source:PitchBook
Dramatic Quartile Differences
Private Equity IRR Quartiles by Vintage Year
Top
Quartile
3rd
Quartile
2nd
Quartile
Source:PitchBook
Bottom
Quartile
Source:PitchBook
Matured Funds Called 92% of Committed Capital
Private Equity Capital Call
100%
6%
8%
8%
90%
12%
12%
25%
80%
41%
51%
70%
68%
60%
50%
83%
94%
92%
92%
40%
88%
88%
75%
30%
59%
49%
20%
32%
10%
17%
0%
2002
2003
2004
2005
2006
Percentage Called
2007
2008
Percentage Uncalled
2009
2010
2011
Source:PitchBook
Venture Capital
Performance
Mid-Sized VC Funds Showed Growth Trend
Venture Capital Average Fund IRR by Vintage Year
15%
10%
8%
10%
7%
5%
5%
5%
4%
2%
0%
0%
2000
2001
-1%
0%
3%
2002
2003
-1%
2004
2005
2006
2008
2009
0%
-2%
-5%
2007
-5%
-7%
-10%
-10%
-12%
-15%
Under $150M
$150M - $500M
$500M+
Source:PitchBook
$150M-$250M Funds Generated 2nd Highest Returns
Venture Capital Horizon IRR by Fund Size
30%
25%
20%
15%
15%
$1B+
$500M - $1B
10%
$250M - $500M
6%
5%
$150M - $250M
$80M - $150M
Under $80M
0%
1 Year
3 Years
5 Years
-5%
-10%
-15%
Source:PitchBook
Economy Impacted Returns More than Fund Age
Median IRR by Years Since First Investment
20%
15%
10%
3.35%
5%
3.34%
-0.40%
0%
1
2
3
4
5
6
7
8
-5%
-10%
-15%
-20%
-11.69%
-16.97%
-19.70%
-18.55%
-25%
-30%
2006 Vintage
2007 Vintage
2008 Vintage
Source:PitchBook
TVPI Shows Improvement, DPI Remains Low
Average Venture Capital Return Multiples by Vintage Year
1.6x
1.4x
1.30
1.18
1.2x
1.0x
0.8x
1.34
1.07
1.04
1.05
1.14
1.04
1.09
0.97
0.94
0.36
0.49
1.02
0.51
0.62
1.11
0.6x
0.93
1.05
1.05
0.99
0.94
0.4x
0.59
0.59
0.56
0.2x
0.43
0.37
0.17
0.0x
2000
2001
2002
2003
2004
DPI
2005
RVPI
0.11
0.11
0.10
0.06
0.03
2006
2007
2008
2009
2010
TVPI
Source:PitchBook
VC Funds in Upper Quartiles Show Positive Returns
Venture Capital IRR Quartiles by Vintage
Top
Quartile
3rd Quartile
2nd Quartile
Bottom
Quartile
Source:PitchBook
High % of Committed Capital for New Investments
Venture Capital Call
100%
3%
6%
8%
90%
16%
21%
32%
80%
44%
42%
70%
65%
60%
89%
50%
97%
94%
92%
40%
84%
79%
68%
30%
56%
58%
20%
35%
10%
11%
0%
2002
2003
2004
2005
2006
Percentage Called
2007
2008
Percentage Uncalled
2009
2010
2011
Source:PitchBook
Fund of Funds
Performance
Fund of Funds Delivered Returns Across Vintages
Fund of Funds IRR Quartiles by Vintage
Top
Quartile
3rd Quartile
2nd Quartile
Bottom
Quartile
Source:PitchBook
Fund of Funds Slower to Distribute Capital
Average Fund of Funds Return Multiples by Vintage Year
2.0x
1.75
1.8x
1.51
1.6x
1.41
1.55
1.45
1.4x
1.2x
1.38
1.34
1.26
0.39
0.51
1.12
1.11
1.13
0.67
1.0x
0.82
0.80
1.42
0.8x
1.50
0.97
0.6x
1.02
1.17
1.04
1.02
0.16
0.07
0.11
0.08
0.05
2006
2007
2008
2009
2010
1.01
0.4x
0.79
0.56
0.2x
0.55
0.30
0.0x
2000
2001
2002
2003
2004
DPI
2005
RVPI
TVPI
Source:PitchBook
Mezzanine
Performance
Strong and Consistent Performance Across Vintages
Mezzanine IRR Quartiles by Vintage
Top
Quartile
3rd Quartile
2nd Quartile
Bottom
Quartile
Source:PitchBook
Mezzanine Funds Fastest in Distribution of Capital
Average Mezzanine Return Multiples by Vintage Year
2.0x
1.84
1.8x
1.67
1.6x
1.49
1.52
1.4x
0.05
0.23
1.66
0.18
1.43
0.90
1.2x
1.29
1.14
0.68
1.08
1.07
1.04
1.0x
0.57
0.8x
1.40
0.6x
0.88
0.63
1.50
1.28
1.12
0.78
0.98
0.82
0.4x
0.89
0.57
0.2x
0.44
0.29
0.42
0.30
0.06
0.0x
2000
2001
2002
2003
2004
DPI
2005
RVPI
2006
TVPI
2007
2008
2009
2010
Source:PitchBook
Real Estate
Performance
Top Quartiles Show Slow Recovery
Real Estate IRR Quartiles by Vintage
Top
Quartile
3rd Quartile
2nd Quartile
Bottom
Quartile
Source:PitchBook
2004 – 2008 Funds Still Recovering
Average Real Estate Return Multiples by Vintage Year
2.0x
1.86
1.8x
1.6x
1.53
1.4x
0.24
0.30
1.31
1.32
1.2x
0.41
1.0x
1.62
0.68
0.52
0.99
1.00
0.80
0.91
0.94
0.90
0.83
0.33
0.8x
0.6x
1.01
0.75
1.29
0.4x
0.76
0.57
0.91
0.50
0.69
0.25
0.18
0.07
0.09
0.07
0.07
2005
2006
2007
2008
2009
2010
0.48
0.2x
0.0x
2000
2001
2002
2003
2004
DPI
RVPI
TVPI
Source:PitchBook
Non-U.S. Investor
Performance
PE Vintages Under 2004 Perform Closely to U.S. Counterparts
Average Non-U.S. PE Return Multiples by Vintage Year
2.5x
2.25
2.18
2.04
0.27
2.0x
1.87
0.44
0.17
0.55
1.45
1.5x
1.31
1.18
1.15
1.04
1.0x
0.70
1.98
1.73
0.81
1.69
1.39
0.99
0.99
0.5x
0.69
0.47
0.0x
2000
2001
1.11
2002
2003
2004
DPI
RVPI
2005
TVPI
0.96
0.99
0.19
0.15
0.08
0.12
2006
2007
2008
2009
Source:PitchBook
VC 2001-2004 Vintages Perform Better than U.S. Counterparts
Average Non-U.S. VC Return Multiples by Vintage Year
2.0x
1.75
1.8x
1.50
1.6x
1.39
1.4x
1.15
1.2x
1.0x
0.81
1.30
1.25
0.47
1.09
0.52
0.56
0.88
0.75
1.01
0.8x
0.6x
1.31
0.84
0.31
1.74
1.28
1.03
0.4x
0.2x
0.81
0.75
0.71
0.53
0.50
0.34
0.26
0.0x
2000
2001
2002
2003
2004
DPI
RVPI
2005
TVPI
2006
0.03
0.00
0.00
2007
2008
2009
Source:PitchBook
VIDEO: Better Intelligence & Fund Benchmarking
with the PitchBook Platform
In this video, you’ll learn how to:
•
Access the most robust database on PE and VC fund returns.
•
Create fund benchmarks that match your fund’s peer group.
•
Use our fully transparent data to validate your benchmark.
WATCH NOW:
www.pitchbook.com/videos/better-benchmarking.html