Has PE’s Decline Bottomed? – Mergermarket Half-Year Review Thinks So

Mergermarket today released its half-year private equity review, suggesting that private equity may have hit a bottom.

Between Q1 and Q2, deal volume only decreased 4%. That’s a relatively shallow fall, when compared with the 49% plummet between Q3 and Q4 of last year.

Exit data looks similar:

After declining 44% from Q3 to Q4 last year, exit volume this year has been on a slow but steady rise, gaining an average of two deals in each quarter.

Financial services and dominated deal activity, taking 70% of aggregate deal value in the first half of the year, thanks to deals like IndyMac, iShares and BankUnited. Many of the deals were in the asset management subsector, “which offered and continues to offer a variety of healthy, attractively priced businesses.” Thanks to parent company distress, forced divestitures have provided a fertile buying ground.

Health care dominated the exit market, with sales by H. Lundbec, Stiefel Labs, and Medtronic. The exits were preceded by consolidation involving the world’s largest drug makers. From the report:

The global industry leaders formed as a result of these transactions have ramped up industry competition – which creates a rather optimistic outlook for private equity firms holding Healthcare portfolio companies, as strategic buyers may have greater resources to pay a high premium for strategically compelling assets.

North American Private Equity in Review H109