Joining forces: The co-investment climate in private equity

12 November 2015

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Private equity (PE) firms are becoming increasingly hungry to offer limited partners (LPs) the chance to invest and are being more proactive than reactive, according to a new study Joining forces: The co-investment climate in private equity.

Pepper Hamilton commissioned Mergermarket to interview 50 PE executives from across the United States that have co-invested with an institutional investor within the previous three years (fund sizes managed by the interviewees were equally split between US$250m-US$500m and US$501m-US$999m). Interviewees were asked how co-investments fit into their respective portfolio’s makeup, and on what basis they are doing deals together.

Key findings include:

  • Over three-quarters (76%) of respondents cite regulatory scrutiny as one of the biggest challenges to co-investments, followed by lower returns for sponsors (56%)
  • Providing deal information to prospective LPs was seen by nearly half of respondents as the most common type of arrangement to keep PE and co-investor interest aligned
  • The deal term most often included in co-investment transactions — noted by 68% of respondents — is tag along rights, followed by the obligation to fund follow on investments proportionally (58%) and requiring a separate audit of the co-investment vehicle (52%)

Monthly M&A Insider - November 2015

20 November 2015

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Large valuations and a nearly-recovered US economy have continued to drive M&A activity to new heights. The post-summer period has seen global dealmaking hit a new record by value for the month of October with 1,047 deals worth US$331.4bn, surpassing October 2006’s pre-crisis peak of 1,295 deals worth US$311.8bn, and rising 32% in terms of value over the same period in 2014, which saw 456 more deals worth US$251.1bn.

Highlights from the report include:

  • North America continued to dominate global dealmaking, accounting for 58.5% of M&A with 403 transactions worth US$194bn, up 36.7% from October 2014
  • The TMT sector represented 29.5% of global M&A by value with 191 transactions worth US$97.8bn, more than three times the value each of the third-, fourth-, and fifth-ranked sectors (Consumer, Energy, Mining & Utilities, and Real Estate, respectively)
  • Deal value targeting the Middle East & Africa during October (18 deals, US$12.8bn) reached its highest on Mergermarket record (since 2001), more than doubling October 2014’s deal value (US$6.1bn, 39 deals), whilst accounting for 21 fewer deals

Market Spotlight: Megadeals

23 October 2015

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Megadeals (deals valued over US$10bn) are expected to continue over the next 12 months, according to the majority of respondents in November’s Venue® Market Spotlight. Forty percent of those polled expect this increase to be significant and cite low financing costs and tax/operational efficiencies as the two most likely drivers.

Rising interest rates and regulatory hurdles were considered the joint-most likely factors to curb megadeals over the next year. A rate hike could mean the end for cheaper debt used by companies to acquire, while regulatory hurdles already curtailed many tax inversion deals attempted in the past year.

RR Donnelley commissioned Mergermarket to interview professionals based in the US, Europe and Asia-Pacific to gain insight on their predictions regarding megadeals in the year ahead.

Toppan Vite - Content Management

01 December 2015

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Ensuring the safe and quick handling of papers during an acquisition is an often-unheralded part of M&A – yet it is one of the keys to getting deals over the line and locking in their value. Why is it important, how is it done and how can it be improved? Toppan Vite, in partnership with Mergermarket, asked three M&A practitioners for their thoughts.

Points of discussion:

  • Various management tactics for contents/documents during an M&A deal
  • Problems related to managing content during the due diligence process and pain points related to sharing content
  • Risks associated with improper content/document management

See more and subscribe to Toppan Vite’s Blog here!

Mid-Market: North American M&A 2016 Outlook

10 December 2015

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The outlook for North American mid-market M&A in 2016 is clearer as we enter December. Dealmaking activity in 2015 cooled somewhat after a huge 2014, so what do industry experts expect for 2016? Mergermarket, on behalf of virtual data room provider, Firmex, interviewed five leading experts for their predictions surrounding mid-market M&A activity over the next 12 months in the newsletter Mid-Market: North American M&A 2016 Outlook.

Points of discussion:

  • Current factors defining M&A in North America’s mid-market
  • Commodity prices and its impact on US and Canadian M&A
  • Fed’s decision on interest rates and impending presidential election- what’s in store for mid-market M&A?
  • Hot sectors in the North American mid-market

Monthly M&A Insider - December 2015

17 December 2015

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By the end of November, global M&A worth US$3.9tn across 14,740 transactions YTD had broken 2007’s full-year record value of US$3.7tn across 16,093 transactions by 5.9%, setting a new global record in terms of value – despite a drop in volume by 1,228 – and with one month still left in the year.
Highlights from the report include:
  • November saw the largest pharmaceutical and de facto inversion transaction ever with US-based Pfizer Inc.’s US$183.7bn bid for Ireland-based Allergan Plc.
  • Cross-border and domestic M&A were up in November, by 156.2% and 24.8% respectively.
  • Private equity activity was relatively quiet recording only 147 buyouts worth US$34.6bn for November, a decrease of 20.1% in value compared to the same period last year.

Market Spotlight: 2016 Outlook

21 December 2015

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Global deal value reached US$3.88tn in the first 11 months of 2015, surpassing the value of deals over all 12 months of 2014. And as the year comes to a close, 88% of survey respondents said M&A activity would increase next year, according to this month’s Venue® Market Spotlight.
Seventy-six percent of respondents said North America would receive more M&A attention in 2016, while 60% said Asia-Pacific would make gains. In looking at specific sectors, the TMT sector is expected to see the most activity, as predicted by 64% of respondents, followed by the consumer sector (48%). RR Donnelley commissioned Mergermarket to interview professionals based in the US, Europe and Asia-Pacific to gain insight on deal-making activity for the year ahead.

A maturing market: Asia-Pacific private equity outlook 2014

09 January 2014

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Private equity in Asia is breaking new ground. International investors continue to enter the market, local firms are holding their own against global counterparts, and the market as a whole is evolving. Analyzing these trends and others, EY and Mergermarket have once again teamed up to release the third outlook on the private equity industry in Asia. Titled A maturing market: Asia-Pacific private equity outlook 2014, this publication highlights expectations for the year ahead as well as insights into Asia’s future as a destination for global capital. From the challenges practitioners will face to industry and government-related developments across the region, this report provides a comprehensive view of the private equity industry in 2014.

Highlights from A maturing market: Asia-Pacific private equity outlook 2014 include:

  • Cash-rich corporates will no longer pose the greatest challenge to private equity in Asia-Pacific, with only 40% of respondents emphasizing this obstacle compared with 79% in last year’s survey. While competition will remain between private and strategic acquirers, private equity will continue to gain ground as global buyout firms increase their presence and as local firms capitalize on their knowledge of the local business landscape.
  • Asia-based funds will continue to pose a greater challenge to global PE agendas in the year ahead, with 99% of respondents anticipating that competition in terms of raising capital would be significant. Likewise, 94% said executing transactions in Asia vs. non-Asia fund situations would prove difficult for foreign firms.
  • Institutional investors from Greater China and Australasia will be the prime investors from Asia, according to 77% and 45% of respondents, respectively. Most institutional equity capital inflows from outside Asia will originate from North America, according to 58% of respondents, an increase from 47% for 2013.
  • Making acquisitions and fund-raising were slated to hold high priority for GPs and PE professionals. Respondents anticipate acquisitions to focus more on control buys, rather than minority stakes.

Market Spotlight: Buyout Financing

30 April 2015

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Welcome to April’s Venue® Market Spotlight. This month’s edition focuses on Buyout Financing.
In April 2015, RR Donnelley commissioned Mergermarket to interview professionals based in the US, Europe and Asia-Pacific who are generally optimistic that private equity (PE) leveraged buyout financing will increase in the next 12 months. On the other hand, those who predict that the financing will decrease, cite regulatory shifts that affect how PE firms conduct business as a main challenge.

Asia-Pacific M&A – Houlihan Lokey Quarterly Newsletter

17 January 2014

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While mega deals continue to dominate the headlines, Asia’s M&A story remains largely focused on the middle market. Asia-Pacific is home to a deep pool of companies with enterprise values of between US$50m and US$500m, and M&A in this segment drives deal activity in the region. In China, returning confidence has led to renewed interest across the north Asian market from both strategic and private equity investors. The patchwork of countries comprising Southeast Asia presents significant opportunities for investors willing to accept the attendant risks – but not without first considering effective strategies for completing acquisitions in the region.

Content in this edition includes:

  • Deals in the US$50m to US$500m range totaled 536 deals worth US$91.6bn, accounting for 35% of volume and 32% of value in 2013. Of these deals, 84 were buyouts worth US$17bn from private equity investors.
  • Chinese M&A accounted for the bulk of mid-cap transactions, with 40% of regional deal volume and 42% of value. China’s mid-market potential lies in companies founded by entrepreneurs in the last few decades, companies that have since reached a level of maturity with critical mass.
  • Southeast Asia focused deal activity remained relatively light, with the sub-region’s main economies – Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam – accounting for only 14% of regional mid-market deals.
  • An exclusive interview with Houlihan Lokey Director Jeff Wilson on the challenges and opportunities of investing via the middle market, and effective strategies for private equity firms to exit these investments.


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