West Coast Data Roundup -- Buyouts West Final Version
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WEST COAST DATA ROUND UP Matthew Toole Buyouts West November 18, 2008
Worldwide M&A Activity down 37% - Private Equity-backed M&A declines 75% over 2007 1,600
30% Strategic M&A Private Equity M&A
1,400
Private Equity M&A as % of Total M&A
25%
20% Volume ($bil)
1,000
800
15%
600 10% 400 5% 200
0
0% 1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
% Private Equity Activity
1,200
US M&A Activity down nearly 40%; Private Equity-backed M&A declines 85% over 2007 700
40% Strategic M&A Private Equity M&A
600
35%
Private Equity M&A as % of Total M&A
30%
Volume ($bil)
25% 400 20% 300 15% 200 10% 100
5%
0
0% 1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
% Private Equity Activity
500
West Coast Buyout Investments up 18% over 2007; Number of West Coast Buyout Investments Decline 2000
180 Buyout Investments by West Coast Firms ($bil)
160
Number of Deals 140
1500
100 1000 80
60 500
40
20
0
0 1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
Number of Deals
Volume ($bil)
120
Private Equity Slump is a Global Phenomenon 600
-81%
500
Volume ($bil)
400
300
-59%
200
-4%
100
-51%
-72%
0 Americas
Europe
Central Asia/AsiaPacific
Volume: 1/1/2008-11/17/2008
Japan
Volume: 1/1/2007-11/17/2007
Africa/Middle East
Measured decline in mid-market buyouts; less reliant on global debt financing $500
Lo-$500
$400
$500m-$1b
$1b-$5b
$5b-Hi
Value ($bil)
$300
$200
$100
$0 1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
Global Buyout Investments by Sector Worldwide Buyouts by Industry
Global M&A - Buyouts Impact
500
4.3
450
3.6
4.5
21.6
4.8
400
Strategic Volume ($bil)
350
Buyout Volume ($bil)
300
5.3
250
5.8 14.4 6.3
200 150 100
8.9
11 9.5
50
Retail
Media
Telecom
Real Estate
High Tech
Healthcare
Industrials
Materials
Consumer Staples
Consumer Products
Energy and Power Consumer Products and Services Materials Healthcare Consumer Staples Retail
Energy and Power
Financials High Technology Industrials Media and Entertainment Telecommunications Real Estate
Financials
0
*Data through 9/30/2008
PE Activity was a Key Driver of the M&A Market and Investment Banking Fees 16000 M&A Exit
14000
Equity Exit Portfolio Activity
12000
Buyout Financing Buyout
Fees ($mil)
10000
8000
6000
4000
2000
0 2001
2002
2003
2004
2005
2006
2007
Fees paid by Financial Sponsors
Imputed Fee Estimates by Freeman & Co
Global Retraction in Credit Markets Slows Buyout Activity; HY Activity down 80% over 2007 80000
180
500
900
70000
160
450
800
140
60000
120 50000
400
700
350
600
300 100
40000
500 250
80
400 200
30000 60
300
150 20000
40
10000
20
0
0 '04
'05
'06
High Yield Bonds ($mil)
'07
'08
Number of Deals
200
100
100
50
0
0 '04
'05
'06
Leveraged Loans ($bil)
'07
'08
Number of Deals
*Data through 9/30/2008
Frozen Exit Markets for Venture and Buyouts US Mergers & Acquisitions
US Initial Public Offerings 90
400
80
350
70
300 60
250 50
200 40
150 30
100
20
50
10
0
0 2001
2002
2003
2004
Venture-backed IPO
2005
2006
2007
Buyout-backed IPO
2008*
2001
2002
2003
2004
Venture-backed M&A
2005
2006
2007
Buyout-backed M&A
2008*
Global Private Equity Fundraising 300
Venture Fundraising ($bil)
250
Buyout Fundraising ($bil)
200
150
100
50
0 1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008*
*Data through 9/30/2008
West Coast Buyout Fundraising Down 38% from 2007 levels; Number of Funds on Par with Year-Ago 15
25
20
Funds ($bil)
15
10 5
5
0
0 1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
Funds Raised by West Coast Buyout Firms ($bil)
3Q07
4Q07
1Q08
Number of Funds
2Q08
3Q08
Number of Funds
10
Performance Methodology •
All calculations are done at the fund level* by Thomson Reuters based on cash flows and NAVs reported by participating LPs and GPs
•
Cash flow database contains 1800+ US private equity funds (480+ buyout funds)
Definitions: •
Pooled IRR: IRR of a group of funds where their cash flows have been aggregated together before IRR calculation
•
Investment Horizon Return: IRR calculated with Net Asset Value as capital outflow at beginning of period, Net Asset Value at end of period, and actual cash flow in between
* net of management fees and carried interest
US Performance Benchmarks Fund Type Early/Seed VC Balanced VC Later Stage VC All Venture Small Buyouts Med Buyouts Large Buyouts Mega Buyouts All Buyouts Mezzanine Buyouts and Other PE All Priv Equity
1 Yr
3 Yr
5 Yr
10 Yr
20 Yr
2.10 2.50 15.30 5.10 (8.40) 15.10 27.40 (1.90) 0.40 12.50 0.80 1.60
4.90 10.80 12.40 8.50 5.20 11.60 8.30 11.10 10.50 5.40 11.40 10.60
5.00 11.90 11.10 8.80 8.90 12.80 13.50 14.50 13.90 5.20 13.70 12.30
32.90 14.40 8.50 16.60 4.70 7.40 6.70 7.80 7.40 5.80 7.80 9.50
21.40 14.70 14.50 16.90 12.60 11.80 12.00 11.30 11.60 8.10 11.40 13.30
*Data through 6/30/2008
US Private Equity Performance Index 20
15
10
5
0 1 yr
3yr
5yr
10yr
20yr
-5
-10 All Venture
All Buyouts
NASDAQ
S&P 500
*Data through 6/30/2008
Worldwide M&A Activity down 37% - Private Equity-backed M&A declines 75% over 2007 1,600
30% Strategic M&A Private Equity M&A
1,400
Private Equity M&A as % of Total M&A
25%
20% Volume ($bil)
1,000
800
15%
600 10% 400 5% 200
0
0% 1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
% Private Equity Activity
1,200
US M&A Activity down nearly 40%; Private Equity-backed M&A declines 85% over 2007 700
40% Strategic M&A Private Equity M&A
600
35%
Private Equity M&A as % of Total M&A
30%
Volume ($bil)
25% 400 20% 300 15% 200 10% 100
5%
0
0% 1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
% Private Equity Activity
500
West Coast Buyout Investments up 18% over 2007; Number of West Coast Buyout Investments Decline 2000
180 Buyout Investments by West Coast Firms ($bil)
160
Number of Deals 140
1500
100 1000 80
60 500
40
20
0
0 1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
Number of Deals
Volume ($bil)
120
Private Equity Slump is a Global Phenomenon 600
-81%
500
Volume ($bil)
400
300
-59%
200
-4%
100
-51%
-72%
0 Americas
Europe
Central Asia/AsiaPacific
Volume: 1/1/2008-11/17/2008
Japan
Volume: 1/1/2007-11/17/2007
Africa/Middle East
Measured decline in mid-market buyouts; less reliant on global debt financing $500
Lo-$500
$400
$500m-$1b
$1b-$5b
$5b-Hi
Value ($bil)
$300
$200
$100
$0 1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
Global Buyout Investments by Sector Worldwide Buyouts by Industry
Global M&A - Buyouts Impact
500
4.3
450
3.6
4.5
21.6
4.8
400
Strategic Volume ($bil)
350
Buyout Volume ($bil)
300
5.3
250
5.8 14.4 6.3
200 150 100
8.9
11 9.5
50
Retail
Media
Telecom
Real Estate
High Tech
Healthcare
Industrials
Materials
Consumer Staples
Consumer Products
Energy and Power Consumer Products and Services Materials Healthcare Consumer Staples Retail
Energy and Power
Financials High Technology Industrials Media and Entertainment Telecommunications Real Estate
Financials
0
*Data through 9/30/2008
PE Activity was a Key Driver of the M&A Market and Investment Banking Fees 16000 M&A Exit
14000
Equity Exit Portfolio Activity
12000
Buyout Financing Buyout
Fees ($mil)
10000
8000
6000
4000
2000
0 2001
2002
2003
2004
2005
2006
2007
Fees paid by Financial Sponsors
Imputed Fee Estimates by Freeman & Co
Global Retraction in Credit Markets Slows Buyout Activity; HY Activity down 80% over 2007 80000
180
500
900
70000
160
450
800
140
60000
120 50000
400
700
350
600
300 100
40000
500 250
80
400 200
30000 60
300
150 20000
40
10000
20
0
0 '04
'05
'06
High Yield Bonds ($mil)
'07
'08
Number of Deals
200
100
100
50
0
0 '04
'05
'06
Leveraged Loans ($bil)
'07
'08
Number of Deals
*Data through 9/30/2008
Frozen Exit Markets for Venture and Buyouts US Mergers & Acquisitions
US Initial Public Offerings 90
400
80
350
70
300 60
250 50
200 40
150 30
100
20
50
10
0
0 2001
2002
2003
2004
Venture-backed IPO
2005
2006
2007
Buyout-backed IPO
2008*
2001
2002
2003
2004
Venture-backed M&A
2005
2006
2007
Buyout-backed M&A
2008*
Global Private Equity Fundraising 300
Venture Fundraising ($bil)
250
Buyout Fundraising ($bil)
200
150
100
50
0 1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008*
*Data through 9/30/2008
West Coast Buyout Fundraising Down 38% from 2007 levels; Number of Funds on Par with Year-Ago 15
25
20
Funds ($bil)
15
10 5
5
0
0 1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
Funds Raised by West Coast Buyout Firms ($bil)
3Q07
4Q07
1Q08
Number of Funds
2Q08
3Q08
Number of Funds
10
Performance Methodology •
All calculations are done at the fund level* by Thomson Reuters based on cash flows and NAVs reported by participating LPs and GPs
•
Cash flow database contains 1800+ US private equity funds (480+ buyout funds)
Definitions: •
Pooled IRR: IRR of a group of funds where their cash flows have been aggregated together before IRR calculation
•
Investment Horizon Return: IRR calculated with Net Asset Value as capital outflow at beginning of period, Net Asset Value at end of period, and actual cash flow in between
* net of management fees and carried interest
US Performance Benchmarks Fund Type Early/Seed VC Balanced VC Later Stage VC All Venture Small Buyouts Med Buyouts Large Buyouts Mega Buyouts All Buyouts Mezzanine Buyouts and Other PE All Priv Equity
1 Yr
3 Yr
5 Yr
10 Yr
20 Yr
2.10 2.50 15.30 5.10 (8.40) 15.10 27.40 (1.90) 0.40 12.50 0.80 1.60
4.90 10.80 12.40 8.50 5.20 11.60 8.30 11.10 10.50 5.40 11.40 10.60
5.00 11.90 11.10 8.80 8.90 12.80 13.50 14.50 13.90 5.20 13.70 12.30
32.90 14.40 8.50 16.60 4.70 7.40 6.70 7.80 7.40 5.80 7.80 9.50
21.40 14.70 14.50 16.90 12.60 11.80 12.00 11.30 11.60 8.10 11.40 13.30
*Data through 6/30/2008
US Private Equity Performance Index 20
15
10
5
0 1 yr
3yr
5yr
10yr
20yr
-5
-10 All Venture
All Buyouts
NASDAQ
S&P 500
*Data through 6/30/2008
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