The Current US Private Equity Scene In 11 Charts

Our 2Q 2017 US PE Breakdown uses deals, exits and fundraising data from across the US private equity industry to analyze the health of the market. Here are 11 key charts from the report, which is available for free by clicking here.

Median EBITDA multiples of US M&A (including buyouts)

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Though not quite at last year’s level, current market pricing certainly poses a challenge for PE deal teams.

Median debt percentages in US M&A (including buyouts)

High-yield credit spreads are at a three-year low, meaning there is plenty of appetite for buyout loans. The median debt percentage has risen accordingly to well above last year's mark.

US add-on % of buyout activity

Have we reached peak add-on? After climbing nearly every year since 2006, add-ons have continued to make up nearly two-thirds (64%) of buyout activity.

Active US PE firms (#)

After years of steady increases, last year's decline is mainly due to consolidation within the industry. Financial services firms, including PE companies, have been buying each other to become "one-stop shops" for LPs.

Note: We define "active" as having made an investment in the last three years or having raised a fund in the last five years.

US PE assets under management

The industry’s AUM, meanwhile, continues to grow. PE firms controlled $1.47 trillion dollars (including dry powder plus existing investments) as of year-end 2016, the highest figure on record.

US PE-backed exit activity

The typical PE exit cycle is running down, it would appear, especially given the reduction in company inventory over the last few years.

Median US PE-backed exit size ($M)

PE sellers have continued to resort to secondary buyouts, which are at unprecedented heights in terms of size.

US PE fundraising

This trend continues to be driven by strong distributions over the last few years and increased PE allocations as LPs seek higher returns. If this pace continues, 2017 will record the most commitments in a year since 2007.

US PE funds (#) to hit target

PE firms are continuing to experience nigh-unprecedented success in fundraising, testifying to even more targeted fundraising strategies and limited partners' willingness to maintain exposure to the asset class.

Median US PE fund size ($M)

Sub-$100 million funds continue to make up a smaller percentage of closes as the median fund size grows—another sign that investors are bullish on PE returns and willing to commit greater amounts to the asset class.

US PE fund time metrics (months)

One might expect commitments to eventually slow as distributions from GPs have begun slowing, but we believe the fundraising craze is nowhere near ending as public pensions and other LPs face major shortfalls.