Fall 2016 issue of Horizons

PRIVATE EQUITY

A Big Year for M&A and Private Equity by Ben Barnes, CPA, CGMA

T he mergers and acquisition (M&A) market experienced its largest transaction year in 2015, with buyers dishing out over $4.3 trillion on M&A deals. The fourth quarter of 2015 itself boasted $1.3 trillion in deal activity. This momentum, though, seemed to quickly evaporate in the first half of 2016, as the M&A market seemed to have paused to catch its breath. Nonetheless, while some industry segments have struggled to keep pace with the 2015 precedent, outlooks remain upbeat for the final months of 2016.

According to Pitchbook’s Q2 2016 PE Activity Report , median fund size grew approximately 50.0% year-over-year, with nearly 90.0% of funds meeting their fundraising target. Additionally, median deal size for Q2 2016 was nearly $40 million, and median platform buyout deal size was reported at just over $120 million. B2B and B2C companies accounted for 35.0% and 20.0% of deals, respectively, trailed by IT deals (19.0%) and healthcare deals (10.0%). North American firms captured 56.0% of the 1,325 Q2 2016 deals. Following the recession, the private equity industry experienced six straight years of investment expansion. As uncertainty and anxieties mount regarding a future economic downturn or recession, many firms have begun to alter their investment approaches and strengthen their portfolios accordingly.

Private Equity Update Private equity firms enjoy favorable

conditions for continued investment growth, even amidst global economic concerns.

page 14 | horizons Fall 2016