The volume and value of global private equity-backed deals worth $5 billion and above jumped in 2024, and the totals are on pace to challenge the 22-year record set in 2021.
Megadeals numbered 13 for the year through July 29, up from eight such transactions for the entire 2023, S&P Global Market Intelligence data shows.
Transaction value — the deal value paid for equity, plus the value of assumed current liabilities, net of current assets — totaled $123.64 billion as of July 29, already exceeding the $75.20 billion for full year 2023.
This year's surge in megadeals is all the more surprising, given a lukewarm M&A market and investor concerns about a US recession, inflation and interest-rate direction.
Accumulated capital
Deals with a big price tag are mainly a result of private equity firms spending some of the record $2.62 trillion of capital raised but not yet deployed, also known as dry powder.
Large firms "have been sitting on big piles of capital for a while and are behind on deployment of their funds as a result," said Janet Brooks, partner at private placement agent Monument Group.
Some of the heavyweight private equity firms with billions in dry powder were involved in megadeals this year.
In two of the largest transactions, Apollo Global Management Inc. agreed to buy a 49% stake in a joint venture related to Intel Corp.'s factory in Ireland for $11.23 billion, while KKR & Co. Inc. and The Carlyle Group Inc. agreed to buy about $10.1 billion of prime student loans from Discover Financial Services.
Apollo and KKR had estimated dry powder of about $42 billion each as of Aug. 12, and Carlyle had $22.75 billion, according to Market Intelligence data.
Technology-focused Silver Lake Technology Management LLC, which is taking sports and entertainment company Endeavor Group Holdings Inc. private in a $21.09 billion deal, had $18.40 billion in dry powder as of Aug. 12.
Other driving forces
The dramatic rise of private credit funds could also be a factor, offering private equity ample leverage for huge transactions. Private credit funds across all strategies in August held $417.11 billion in dry powder, up from $69.75 billion in 2019, according to Market Intelligence and Preqin data.
Historically, large deals relied on leverage, but today's megadeals typically use a modest level of debt, according to Kevin Amess, director of the Centre for Private Equity and MBO Research.
"Recent large deals often do not rely on debt. Although private credit allows PE firms to manage risk, the record dry powder is the most important driver of [megadeals]," Amess said.
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Tech, finance sector deals more prevalent
Megadeals in 2024 were in various sectors. Of the 13 transactions recorded in the year to July 29, five were in the technology, media and telecom sector. Silver Lake's take-private of Endeavor was the largest private equity deal of the year so far.
The financial sector recorded four megadeals, while the energy and utilities sector had two.
Megadeals per geography
In terms of geography, the US and Canada led with seven megadeals for the year to July 29, up from the full-year 2023 total of six.
Europe, including the UK, reported six transactions at $5 billion or above, already higher than annual totals for the region since at least 2019.
Amess said he sees "a healthy pipeline of megadeals across Europe."
"The buyout market is coming out of a stagnant period and that will improve optimism resulting in a lot more deals, including [megadeals]. I suspect there is also a willingness for equity holders to sell because there is often a buyout premium paid."
