Value of U.S. PE deals jumped 28 pct in 2017

The high-priced M&A market helped boost valuations in 2017, while the number of deals increased.

So far in 2017, 4,554 global PE M&A transactions valued at $319.89 billion have been announced, Thomson Reuters data shows. This compares with 4,166 deals totaling about $254 billion in 2016, the data provider said. This represents a 9.3 percent bump in volume while valuations rose nearly 26 percent.

The trend continued in the U.S. The number of announced deals jumped 33 percent to 1,666 as of Dec. 21 from 1,252 in 2016, Thomson Reuters said. Valuations surged 28 percent to $131.3 billion from $102.3 billion.

“Valuations are out of sight,” one PE executive said.

Consumer products and services emerged as the most active sector in the U.S., producing 251 transactions totaling $31.3 billion. High technology — last year’s most active sector — came in second with 444 U.S. announced PE transactions valued at $21.2 billion, Thomson Reuters said.

Here are the top five U.S. PE deals in 2017, according to Thomson Reuters.

  1. JAB Holding’s $7.5 billion buy of Panera Bread. JAB is the investment vehicle of the Reimann family. The firm owned Krispy Kreme doughnuts and Keurig Green Mountain when it closed its buy of the bakery chain in July.
  1. Sycamore Partners shrugged off “retail apocalypse” fears to make a $6.5 billion bet on Staples in 2017. Almost 9,000 retail stores are expected to disappear this year, with the graveyard including some big names like Toys R Us, Limited, and Wet Seal. Sycamore’s rationale for Staples? The buyout shop distinguishes between mall-based fashion retailers, which are vulnerable to changing consumer tastes, and retailers with a niche and rich cash flow, such as Staples, Reuters said. The deal closed in September.
  1. Healthcare emerged as one of the busiest sectors this year, producing 224 U.S. announced M&A PE deals this year, TR said. The sector also generated the third biggest transaction in 2017: Pamplona Capital Management’s $5 billion buy of Parexel, a U.S. pharmaceutical-research-services provider.
  1. Apollo Global Management’s $4.95 billion buy of West Corp, a U.S. telephone-conferencing-services provider. This is the second time West Corp has gone private. In 2006, Thomas H Lee Partners and Quadrangle Group acquired West Corp for $4.1 billion.
  1. Blackstone Group beat out Clayton Dubilier & Rice to buy the employee-benefits-outsourcing business of Aon for $4.8 billion, Reuters said. The deal gave Blackstone ownership of a business that processes work benefits for 15 percent of the U.S. population, the story said.

Action Item: For more on Thomson Reuters data, contact Ilya Hemlin at Ilya.hemlin@thomsonreuters.com

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