Transaction values more than doubled year-on-year, as firms deployed ever-larger amounts of dry powder
In line with the broader M&A market, private equity firms had an exceptionally busy 2021. Deal value soared to US$987.6 billion in the year, more than doubling what was an already high total of US$474.5 billion in 2020. This is now the highest value recorded for any year on Mergermarket record (since 2006). Volumes were also up significantly, rising 59 percent to 3,460 deals—again, a new annual record.
Buyouts drove much of this increase, as aggregate deal value jumped 157 percent on 2020 totals to US$665.5 billion, with volumes rising 64 percent to 2,385 deals. This high level of activity reflects the significant stores of dry powder at private equity firms' disposal. Globally, this stood at US$2.3 trillion in August 2021, according to Preqin, with US firms holding approximately 50 percent of the total. In addition, thanks to the trend for co-investment by private equity fund investors—the limited partners—the industry's firepower is significantly larger than these figures suggest.
US$987.6
billion
The value of US PE-related deals in 2021— more than double the same period in 2020
View full image: US private equity buyouts 2016 – 2021 (PDF)
View full image: US private equity exits 2016 – 2021 (PDF)
Technology and club deals push volumes higher
Technology and healthcare continued to be among the more popular sectors for US-based private equity deals, accounting for more than half of the industry's total deal value. Indeed, the largest US private equity deal of the year was in healthcare. Medline Industries, a medical supplies manufacturer, was acquired for US$34 billion by a consortium that included The Carlyle Group, Hellman & Friedman, Blackstone Group, Abu Dhabi Investment Authority and GIC.
This transaction also demonstrates the recurring popularity of club deals. The profileration of club deals clearly reflects a step-up in the deal size some firms are targeting—an unsurprising trend given the fact that investor commitments are concentrating among larger firms—the top-25 firms between them are sitting on half a trillion dollars of dry powder.
Given higher valuations, it's unsurprising that exit activity also rose in 2021, up 49 percent by value to US$482.2 billion and up 50 percent by volume, totaling 1,511 deals. Private equity houses are also clearly taking advantage of a seller's market to crystallize returns for their investors.
Among popular exit types is merging portfolio companies with a SPAC. Blackstone did just that to exit benefits provider Alight in a deal that valued the company at US$7.3 billion. With so many SPACs raised looking for targets, this trend may be only just beginning.
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