Terminated deals decline; PE backed off video game funding rounds in 2023

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The latest in a series of quarter-over-quarter declines in terminated deals is yet another signal that M&A markets are slowly improving. But it is not all good news for private equity.

Terminated deal counts in overall M&A have declined for six consecutive quarters as of the first quarter of 2024, according to S&P Global Market Intelligence data. The number of private equity-backed deals falling apart before they cross the finish line fell for the third consecutive quarter in the first quarter.

Is the distance between buy-side and sell-side views on valuations closing? That is certainly one way to interpret the data. Through much of 2022 and 2023, rising interest rates and a murky global economic outlook kept buyers and sellers apart.

Here is the catch: Private equity's share of all terminated deals rose for the second consecutive quarter, ticking up a percentage point to 10.5% in the first quarter.

Read more about the latest data on terminated private equity-backed deals.

CHART OF THE WEEK: Falling participation in video game company funding rounds

⮞ The announced value of private equity- and venture-capital-backed funding rounds for video game companies totaled $1.37 billion in 2023, down nearly 82% year over year from $7.53 billion in 2022, according to Market Intelligence data.

⮞ Funding rounds for video game companies were down overall in 2023, with the total announced value of rounds backed by both private equity and non-private equity investors declining 72% year over year to $2.98 billion.

⮞ Even so, private equity and venture capital's share of those funding rounds shrank to about 46% of the total in 2023 from about 71% of the total in 2022.

TOP DEALS AND FUNDRAISING

– KKR & Co. Inc.-managed funds agreed to buy Swedish pharmaceutical company Immedica Pharma AB. Impilo AB will reinvest in Immedica to become an equal owner of the company alongside KKR.

– Funds and accounts managed by KKR struck a deal to acquire Dutch eye care company Nexeye BV from 3i Group PLC.

– The Sterling Group LP raised $3.5 billion for its Sterling Group Partners VI LP fund at closing. The fund will target corporate carve-outs and family businesses in the industrial sector.

– Kedaara Capital Investment Managers Ltd. closed its fourth fund with $1.73 billion in capital, DealStreetAsia reported. The private equity firm focuses on making control investments in India.

– Vestar Capital Partners LLC closed a $1.2 billion single-asset continuation fund for its stake in consumer behavior adviser Circana Inc. Blackstone Strategic Partners and HarbourVest Partners LLC were the lead investors in the transaction.

MIDDLE-MARKET HIGHLIGHTS

– Gamut Capital Management LP and the Doyle family agreed to buy managed print services provider DEX Imaging Inc. The seller is Staples Inc.

– Avesi Partners LLC provided funding to First Steps Recovery, a substance use disorder treatment company.

– Balance Point Capital Advisors LLC, together with its affiliated funds, invested in voluntary benefits program company BenefitHub Inc.

FOCUS ON: ASSET MANAGEMENT

– Eurazeo SE agreed to buy a majority stake in Eres Gestion, a French investment management company, from IK Partners' IK VIII fund.

– Blackstone Inc. made a sweetened fourth offer to acquire London-based music rights investor Hipgnosis Songs Fund Ltd. for $1.24 per share in cash. Hipgnosis later agreed to an improved $1.25-per-share cash offer from Apollo Global Management Inc.-backed music company Concord Chorus, The Wall Street Journal reported.

– Bonaccord Capital Partners bought a passive minority stake in growth equity firm Lead Edge Capital Management LLC.

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For further private equity deals, read our latest In Play report, which looks at potential private equity-backed M&A, including rumored transactions, each week.

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