After a strong finish in 2018, the M&A exit market started off 2019 with its slowest quarter in over two years.
All told, sponsors in the first quarter of 2019 closed 144 deals for a combined value of $23.4 billion, according to Thomson Reuters. That was a steep decline from a strong fourth quarter in 2018, which saw 204 deals valued at $49.9 billion.
Looking at U.S.-based PE-backed exits over the past seven years, the average quarter has seen 151 deals valued at $27.1 billion in value.
The first quarter had the lowest number of exits since the third quarter in 2016, which had 142. The combined value of Q1 exits was the lowest since the second quarter 2017, when the combined value was $18.3 billion.
Of Q1’s 144 exits, 41 had disclosed values. Eight of these crossed the billion-dollar threshold, two of which were valued at more than $3 billion.
The largest deal belonged to NGP Energy Capital Management, which sold Wildhorse Resource Development Corp to Chesapeake Energy Corp for $3.8 billion. Wildhorse is a Houston-based oil and natural gas company.
The second largest acquisition was DJO Global, a wholesaler of orthopedic products, which Blackstone Group sold to Colfax Corp for $3.1 billion.
The third largest deal was HIG Capital’s sale of Caraustar Industries. Greif Inc purchased the manufacturer of recycled paperboard and packaging products for $1.8 billion.
The most active sector was industrials, which accounted for 16.9 percent of all M&A exits with 24 deals in the first quarter. The next busiest segment was high technology, with 21 deals, or 14.8 percent of total exits. At third was consumer products and services, with 19 deals, or 13.4 percent of the total.
IPOs continue to fall
As with M&A, PE-backed IPOs had their worst outing in about two years. Just four companies made their debut on U.S. public markets for a combined proceeds of $626 million.
The largest IPO was for therapeutics company Gossamer Bio, which raised more than $276 million in its public debut. The company is backed by ARCH Venture Partners, Omega Funds and Hillhouse Capital Partners.
Crescent Acquisition Corp had the second largest public offering of PE-backed companies, raising $250 million. The financial company, backed by Crescent Capital Group, was formed to pursue acquisitions or similar business combinations with one or more businesses.
As the accompanying “PE-Backed IPO Exits By Quarter” chart shows, the IPO market is erratic, with PE-backed IPOs fluctuating sharply from quarter to quarter.