Global buyout activity defies market uncertainty to reach a post-crisis high, as funds deploy record levels of dry powder

Buyout activity delivered a stellar performance in Q2. There were 707 deals worth US$144 billion, up 75 percent by value from the previous quarter to reach the highest quarterly value since Q2 2007. PE’s attraction as an asset class to investors worldwide is resulting in record levels of dry powder generating substantial PE M&A activity. Research firm Preqin estimates the current amount available for investment at US$842 billion.

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Highlighting Q2’s strong performance, the top nine buyout deals of the first half of the year took place during the quarter. Competition for targets pushed up valuations, with seven announced deals priced over US$5 billion in Q2—up from just one during the same period in 2016.

US companies remain the most active targets for PE buyers globally, attracting six out of the top ten deals of the quarter. The Carlyle Group and Hellman & Friedman agreed to sell Pharmaceutical Product Development to sovereign wealth funds Government of Singapore Investment Corp. and Abu Dhabi Investment Authority in April for US$9 billion. In the same month, Netherlands-based JAB Holdings agreed to acquire US café owner Panera Bread Company for US$7.4 billion from BDT Capital Partners.

Constant innovation within the technology sector has resulted in a steady stream of disruptive assets coming to market that are attractive to PE firms. This sector accounted for the highest number of deals in Q2, with 131 transactions worth US$24 billion—four times Q1’s value of US$6 billion, while deal count increased by 23 to 131.

With record levels of capital to deploy and confidence remaining high, buyouts look set to sustain their pre-crisis levels moving into the second half of the year.