Q1 deal activity slowed to 2010 levels: Pitchbook

In fact, the number of deals closing during Q1 plunged to a low not seen since the global financial crisis, according to Pitchbook.

Globally, the first quarter saw 1,124 buyouts, growth and add-on transactions from valued at $207.79 billion, Pitchbook said. This compares to 1,590 PE transactions valued at $252.94 billion in Q1 2014. This represents a 29 percent decline in the number of deals and 18 percent reduction in value. 

The first quarter was the slowest period for deals since the third quarter 2010, when private equity was struggling through the global financial crisis, said Adley Bowden, Pitchbook’s senior director of analysis. Bowden credited last year’s strong market for private equity M&A for causing first quarter’s dearth of deals.

Another reason? Good companies are selling for high multiples, Bowden said. These high prices are causing many buyers to stay out the market, he said.

“Any time there is something of quality the price is high,” Bowden said. 

Bowden remained positive about M&A this year. The current deal pipeline “is reloading. It’s a natural cycle,” he said. 

Cerberus Capital Management’s $9.2 billion buy of Safeway, which closed during the quarter, was the time period’s biggest deal. Bowden categorized the Safeway sale as an add-on since Albertson’s, a Cerberus portfolio company, is technically the buyer. 

A more typical LBO is PetSmart Inc, which ranks second for the quarter. BC Partners led an investor group to acquire the retailer for $8.7 billion. 

Exits also were slow in the first quarter, with 469 investors selling investments, Pitchbook said. Globally 389 transactions generated $90.88 billion in exited capital in Q1. That is the lowest level since Q1 2013 when there 389 deals produced $54.23 billion in exited capital, Pitchbook said.

Audax Group, Blackstone Group, Carlyle Group and RoundTable Healthcare Partners were among the most active PE firms, with four exits each during the quarter. 

On the fundraising front, 59 private equity firms closed funds in Q1, raising $51.92 billion globally. This is the lowest amount since Q4 2012 when 107 funds collected $47.11 billion. 

Not many large funds closed during the quarter, Bowden said. Among the firms that raised large funds were Bridgeport, which raised 4 billion euros ($4.4 billion) for its fifth buyout fund; Blackstone, which collected $4.5 billion for its second energy-focused PE fund; and NGP Energy Capital Management, which rang up $5.325 billion for its 11th fund.