Exit activity in significant decline; Clearlake, alongside Sam Soni, acquires Ticket Evolution

PE mid-market M&A activity drops this year versus last year.


This is Chris, for Wire Wednesdays.

Not so bad: Private equity middle market M&A activity this year won’t match 2021, but will be comparable to the years of 2018 through 2020, the three highest activity years, according to investment bank DC Advisory.

As of June 30, there have been 4,337 deals valued at about $529.2 billion. That’s compared to 9,171 deals valued at about $1.2 trillion for all of last year.

Exit activity has fallen off a cliff compared to last year, with about 577 exits valued at around $189.9 billion so far this year, compared to 1,811 valued at about $885.2 billion in 2021. Additionally, DC Advisory said the launch of new processes is beginning to slow, “as sponsors who have deployed significant capital in [the first half] are preferring to ‘wait out’ the uncertainty,” the report said.

The fall off of exit activity, and gradual slowing of distribution activity, is causing a slowdown in fundraising and forcing LPs to re-evaluate their private equity portfolio strategies. When deal activity slows, all kinds of problems arise in the land of PE.
Sports: Clearlake Capital, alongside Sam Soni, acquired Ticket Evolution, which provides software to the event ticketing industry. Clearlake made the acquisition through its VictoryLive platform, which it backed alongside Soni.

Soni, founder, CEO and chairman of VictoryLive, formerly founded and led PrimeSport. Ticket Evolution manages sports and events tickets on behalf of professional ticket resellers and rightsholders through a B2B market and distribution capabilities. Read more here on PE Hub.

Over the summer, Clearlake through the VictoryLive platform invested in C3 along with Abu Dhabi Capital Group and Arden Digital Ventures. Read more here.

Still going: Vista Equity is nearing a deal to acquire cybersecurity company KnowBe4 for about $4.5 billion, WSJ’s Laura Cooper is reporting this morning. The deal would value the company at $25 per share.

KnowBe4 received a nonbinding proposal from Vista in September for $24 a share, WSJ said. To get the deal done, Vista is expected to use private credit, as more traditional financing providers are increasingly frozen. Read more here on WSJ.

Another of Vista’s deals, its acquisition alongside Elliott Investment Management of Citrix Systems, became an example of the frozen credit markets as lead banks on the huge debt package were unable to fully syndicate the financing, forcing them to take around $600 million of losses, Bloomberg reported last month.

Pulled: Canadian pension Caisse de dépôt et placement du Québec decided to pull back a portfolio of private equity fund stakes it was considering selling after getting a sense of pricing, sources told Buyouts.

The situation highlights the kinds of challenges facing LP portfolio sales with buyers demanding discounts on average of around 15 percent to net asset value. Even as many LP institutions are on the hunt for paths to liquidity amid a slowdown in distributions, selling at a discount is not always seen as the best option, especially with losses in other parts of the investment portfolio.

“We’re hearing from CIOs, ‘Right now I’m getting beat up so hard in other parts of the portfolio, I don’t want to take a hit all at once by doing a straight secondary,’” a secondaries adviser recently told Buyouts.

Read more here on Buyouts.

That’s it for me. Have a great rest of your day! Hit me up with tips n’ gossip, feedback or the Drama at cwitkowsky@buyoutsinsider.com or on LinkedIn.