As a result of increased focused on deployment, PE is accounting for a larger share of global M&A activity. During the great financial crisis (GFC), PE accounted for about 23% of global M&A activity (including buyside and sellside) whereas in 2021, it accounts for 29% of global M&A activity and one-third of US M&A activity.
3. Club deals help drive activity
The return of club deal structures is starting to differentiate the current environment. After the GFC, PE entered a period in which firms largely stepped away from megadeals and looked to investors for additional capital rather than teaming with other PE firms. Limited partners (LPs), including pension funds, soverign wealth funds (SWFs) and family offices in particular, have become an important source of capital for larger deals. That being said, a new era of large-scale deals is reinvigorating collaborations between PE firms, with US$140b in club deals announced in 1H21, the most since 2007. This speaks to the fact that the pool of PE firms that can both write a US$2b equity check for one deal and provide the operational resources needed to support that company is limited and well-defined.
4. Exit activity is at a record pace
Exit activity has climbed substantially and PE firms are exiting companies at a record pace: the wait is clearly over for firms that were prevented from monetizing assets in 1H20 due to lockdowns. Sales have been strong across all deal types, with trade sales, sales to other PE firms, and IPOs back in earnest.