Q4 2013 Private Equity Deal Flow Report

Trends in business products and services, consumer products, health care and technology
by Wharton PE/VC partner McGladrey

Quarterly Private Equity Deal Flow Reports

McGladrey is partnering with PitchBook to provide quarterly private equity deal flow reports specifically designed for four key industries: business products and services, consumer products, health care and technology. These industries were chosen for their relevance and importance to the private equity market.

The reports profile trends for each industry in private equity investing, exits and fundraising.

Fourth Quarter 2013

Business Products and Services
Private equity investment in business products and services saw a slight increase in the third quarter of 2013, with private equity firms closing 161 deals worth $21 billion. The fourth quarter of 2012 was the best quarter on record for private equity deal-making in the business products and services industry, as firms rushed to close out deals in advance of expected tax increases. This cleared out pipelines and has continued to have an effect on deal-making throughout 2013.

Consumer Products and Services
Private equity deal-making in the consumer products and services industry has been slow through the first three quarters of 2013, though not quite as depressed as other industries, perhaps a sign of the industry’s relative strength as the economy continues its long road to recovery. Private equity firms closed 102 deals worth $21 billion in Q3 2013 to bring the year’s totals to 277 deals and $77 billion.

Health Care
Following one of the slowest quarters for private equity investing in the health care industry over the last four years, the third quarter was a bright spot with $11 billion in capital invested across 74 health care investments. Granted, 2013 is still on pace to be one of the slowest years for private equity investment in health care in quite some time, but with investors continuing to get more details on the implementation of the Patient Protection and Affordable Care Act (PPACA) and health care exchanges officially kicked off, investment in the coming quarters could see further expansion.

Information Technology
Information technology has been one of the most erratic and hard-to-predict industries for private equity deal-making on a quarterly basis over the last few years. In the third quarter, private equity firms closed 89 deals worth $17 billion, a complete reversal from two quarters prior, when firms invested just $7 billion across 58 deals. But on a year-to-year basis, the information technology industry has shown solid growth.

Third Quarter 2013

Business Products and Services
Private equity deal-making in the business products and services industry continued to decelerate in Q2 2013, with PE firms completing just 95 deals totaling $11.0 billion. These are some of the lowest quarterly totals seen in the last decade.

Consumer Products and Services
Deal-making in consumer products and services slowed to a trickle in the first half of 2013. Private equity firms executed just 64 deals during Q2, which is the lowest quarterly total in well more than a decade. Capital invested appears strong at $31.2 billion, but once you take into consideration the $23.2 billion buyout of Heinz, the numbers look much less rosy.

Health Care
Private equity investment in the health care industry was disappointing in Q2 2013 no matter how you slice it, with only $4.1 billion of investment across 37 transactions. In fact, Q2 2013 proved to be the slowest quarter for deal flow since Q3 2009.

Information Technology
Bucking the trend of the broader private equity industry, information technology was the sole industry to see an uptick in deal-making from Q1 to Q2 2013. PE firms invested $12.5 billion across 65 deals in Q2, which is comparable to the quarterly activity over the last two years.

 

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