Q1 Deal Wrap-Up Preview: Firm’s Replenish Pipeline, Focus on New Deals

U.S. buyout shops stepped back to replenish their investment pipeline in the first quarter after a frenzied finale to 2010 exhausted much of the ardor in the leveraged buyout market, Buyouts reports in its upcoming Q1 deal wrap-up.

By March 25, U.S.-based buyout shops had closed 170 control-stake deals representing $20.2 billion in disclosed deal value, nearly 100 deals shy of the 267 deals closed in the fourth quarter of 2010, which represented $31 billion in disclosed deal value.

“It’s almost like after having a big meal you sleep for a long time,” said John Howard, CEO of Irving Place Capital, the New York-based firm that put $700 million to work in six deals in the second half of 2010 but has since been quiet. “We’re coming out of hibernation.”

But in an indication that deal activity should rise, private equity firms announced 51 deals in the quarter that haven’t yet closed, compared to only 28 announced deals in the fourth quarter of 2010.

In another sign of confidence, buyout shops sought new investments with vigor in Q1, after a long period of focusing more on helping existing portfolio companies buy other companies. Of the 170 closed deals, at least 92 could be characterized as platform investments, according to data compiled by Thomson Reuters and Buyouts. Seventy-one could be counted as add-ons, while 37 were sponsor-to-sponsor deals.

Check out the full wrap-up in the 4/11 issue of Buyouts or on www.buyoutsnews.com.

Bernard Vaughan is a Senior Editor at Buyouts Magazine. Follow his tweets @BVaughanReuters. Follow Buyouts tweets @Buyouts. For information on how to subscribe, contact Greg Winterton at greg.winterton@thomsonreuters.com.