S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.
Private equity's middle market is leading the way on exits.
Global buyout funds produced 1,700 exits from portfolio companies between the start of the year and the end of the third quarter, a 10% improvement over the exit count from the same period a year ago, according to an S&P Global Market Intelligence analysis of Preqin data. It is a sign exit activity may be picking up after a two-year lull that slowed the return of cash to investors and hobbled private equity's ability to raise new funds.
While exits are more numerous this year, the transactions are trending significantly smaller than the 2023 average. Chalk it up to fewer big-ticket exits from the large private equity firms.
Higher interest rates since 2022 are forcing buyout fund managers to refocus on roll-up-your-sleeves value creation, doing the hard work of boosting revenues and profit margins at portfolio companies instead of coasting on multiple expansions.
That may be easier in the middle and lower-middle markets, where investments are often in mom-and-pop businesses than at the upper end of the market, where funds tend to target companies already led by skilled management teams.
Read more about rebounding private equity exit activity.
CHART OF THE WEEK: Terminated transactions down in Q3 2024
⮞ The number of terminated private equity-backed M&A deals fell to just four globally in the third quarter, marking the fifth consecutive quarterly decline in such deals called off prior to closing, according to S&P Global Market Intelligence data.
⮞ Terminated M&A deals also declined in the broader markets during the third quarter, falling 81% from the previous quarter's total to just 35 globally.
⮞ The downward trend hints that the gap in valuation expectations between buyers and sellers may be closing.
TOP DEALS AND FUNDRAISING
– Funds managed by Apollo Global Management Inc. affiliates agreed to buy Barnes Group Inc. for about $3.6 billion. Barnes stockholders will receive $47.50 per share in cash, representing an approximately 22% premium over the industrial technology company's closing stock price on June 25.
– Butterfly Enterprises LLC will buy The Duckhorn Portfolio Inc. in an all-cash transaction valuing the luxury wine company at about $1.95 billion. Duckhorn shareholders will receive $11.10 per share in cash, representing a 65.3% premium to Duckhorn's volume-weighted average share price over the 90-day trading period ending Oct. 4.
– Ardian acquired a majority stake in Milan-based ophthalmic and refractive surgery services provider Vista Vision Srl. Existing investor Credem Private Equity SGR SpA will reinvest in the company.
– Shore Capital Partners LLC secured a total of more than $1.9 billion in capital commitments at the close of Shore Capital Healthcare Advantage Fund LP, Shore Capital Business Services Partners Fund II LP and Shore Search Partners Fund I LP.
– Renovus Capital Partners raised $875 million in capital commitments at the close of Renovus Capital Partners IV Core Buyout LP. The vehicle will make control investments in lower-middle-market businesses, focusing on education and technology, healthcare and professional services.
MIDDLE-MARKET HIGHLIGHTS
– Kava Equity Partners added Arrowhead Contracting Inc., a provider and general contractor for environmental remediation services, to its portfolio.
– Greenbriar Equity Group LP closed the sale of aviation services company STS Aviation Group Inc. to an affiliate of H.I.G. Capital LLC.
– Allied Industrial Partners LLC sold water infrastructure operator Dovetail Infrastructure Services. The deal marks a full realization of the firm's first investment.
FOCUS ON: IT CONSULTING
– Circumference Group LLC, The Pritzker Organization LLC and Stephens Capital Partners LLC acquired a majority stake in digital transformation consultancy Visionary Integration Professionals LLC.
– Oakley Capital Investments Ltd.'s Oakley Capital V fund is investing in UK-based managed services provider Assured Data Protection Ltd., subject to regulatory approvals.
– Momenta Ventures AG and RunwayFBU made an investment in German manufacturing solutions provider Phantasma Labs GmbH.
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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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