The exit market for U.S. LBO shops remained stagnant in the second quarter with the number of deals dropping 24 percent on both a sequential and year-over-year basis. And while the IPO market got off to a promising start in the period, it stalled quickly, illustrating that the pair of deals that made it to market were more indicative of the strength of the individual companies and their shared niche in education than any re-kindling of institutional interest in new offerings.
There were 29 M&A exits from April 1 to June 23 of this year. The five with disclosed financial terms had an aggregate value of $929.7 million. During the second quarter of last year, U.S.-based shops completed 38 exits through mergers and acquisition, a figure that coincidentally matched activity in the first quarter of 2009.
The scant number of M&A exits and IPOs during the latest period is further evidence that buyout shops are holding onto investments longer. Firms continue to wait for an improvement in overall economic conditions that should also give deal valuations a lift.
By far, the biggest splashes of the period were made by the IPOs of Bridgepoint Education Inc. and Rosetta Stone Inc., which are counted separate from the previously mentioned M&A exit figure. Both companies not only managed to complete their offerings after pricing their shares late in the first quarter, they’ve also seen their stocks post handsome gains. Both issues are trading well above their debut levels.
Bridgepoint Education arrived on the New York Stock Exchange on April 15, selling 13.5 million shares for $10.50 each.
A day later, Rosetta Stone Inc. sold 6.25 million shares for $18 each on the Big Board, coming in above the anticipated price range of $15 to $17 a share.
Since those deals, however, the IPO market as an exit strategy for buyout shops has dried up. No other portfolio company has moved ahead with plans to go public. In fact, a few portfolio companies pulled their IPO plans. One of those was
The biggest M&A exit of the second quarter was Polaris Acquisition Corp.’s merger with
Just two buyout firms were able to complete multiple exits during the period. GMAC Commercial Holding SPV was the leader on a transaction basis. It sold Capmark Services Ireland Ltd., Capmark Services UK Ltd. and Capmark Asset Management GmbH to Capita Group PLC, a provider of outsourcing services based in the United Kingdom. These three deals had an aggregate value of about $16 million. GMAC Commercial Holding SPV is owned by
Carlyle Group was the only other firm with more than one exit. Besides the sale of Wall Street English, it was also able to find a buyer for the polyurethane systems house of its indirect subsidiary Neochimiki SA, which is a Greek chemical manufacturer. Financial terms weren’t disclosed.