Size of average buyout deals grows smaller in 2021: Refinitiv data

Deals have been coming in at the rate of one every three days

Private equity players may be looking for smaller targets when going for buyouts, going by the trend so far this year.

A buyout is the purchase of a controlling share in a company. Private equity funds have been doing such transactions at the rate of one every three days so far in 2021. There have been 21 such deals this calendar year, shows data till the beginning of March from tracker Refinitiv, now part of the London Stock Exchange Group.

The total value of the deals so far is $664.4 million (as of March 5). This pegs the value per deal at $32 million. Refinitiv considers value including the target’s net debt. The previous year saw a record number of such transactions. There were 282 deals in 2020. This works out to a deal every 1.3 days. The total deal value was $12.8 billion. The average deal size therefore becomes $45 million. This was a fall from the previous year’s average deal size of $91 million. There were 281 transactions in 2019 worth a record $25.5 billion. This was the highest value since at least 1994, according to Refinitiv data. The year 2020 was the highest in terms of total number of deals since 1994.

Owners, who would typically approach a multinational company, are now increasingly looking at private equity funds, according to an investment banker. Private equity players have been flush with funds and they are also able to take decisions quicker, according to the person.

Including 2021, private equity players have done deals worth more in the last five calendar years than in the previous 23 years for which data is available. There were $44.4 billion worth of deals done between 1994 and 2016. The total deal value since is $62.4 billion. These years accounted for 1,007 of 2,443 deals since inception. There were, on an average, less than 15 deals a year for the first ten years for which data is available.