I was on CNBC this morning for a 2007 buyout market outlook segment (video link here), but we ended up mostly talking about whether or not Home Depot will go private. For the record, I think there is better than a 50/50 chance of Home Depot receiving a bid – and a similar likelihood that such an offer would include the participation of recently-ousted Home Depot CEO Robert Nardelli.
It’s too bad that we spent so much time talking about Home Depot, however, because I was all ready to bust out some new 2006 LBO deal-making and fundraising numbers, from my colleagues over at Buyouts Magazine. Since I’d hate such things to go to waste:
Disclosed Deal Value
2004: $137.844 billion
2005: $199.59 billion
2006: $314.78 billion
Note: Includes leverage & assumed debt. Only for U.S.-based targets, or deals including at least one U.S. equity sponsor.
Note: Buyout plus mezzanine debt fundraising for U.S.-based firms.
Going back to crystal-ball gazing, I’d expect both the Disclosed Deal Value and Fund-Raising Totals for 2007 will be up over 2006 numbers. The former is simply because there is no indication that deals will get smaller going forward. Plus, only about half of deal values are disclosed, and it tends to skew toward larger transactions (like Equity Office, which will close in 2007). If we don’t have at least a couple of deals valued at between $40 billion and $50 billion, I’d be surprised (I almost wrote “shocked,” but it wouldn’t quite rise to that level). And Home Depot, of course, would be twice that.
As for fund-raising, there is no projected slowdown of either supply or demand. Carlyle will raise between $15 and $20 billion, KKR is raising additional funds, Bain Capital is re-opening its fund (or at least doing something comparable) and we can expect final closes from firms like Apax U.S., Providence, Silver Lake and Thomas H. Lee. Most new funds are at least double the size of their predecessors, so we should easily surpass the $200 billion mark this year.
*** There also is some new fundraising data from Private Equity Intelligence, which shows the private equity total hitting $401 billion (compared to $311 billion the previous year). One reason why it’s higher is that it’s global (Buyouts only tracks U.S.-based funds), but also because it includes both venture capital funds and funds-of-funds. Here is their press release: Fundraising press release.pdf