The tough economic conditions that took hold in 2009 dampened the LBO deals and capital raising efforts of U.S.-based shops compared to year ago levels.
Thomson Reuters (publisher of PE Week) tracked 530 LBO deals in 2009. Those with reported financial terms had a combined valuation of about $34.7 billion. That tally pales compared with 2008 deal activity, when U.S.-based firms closed 872 LBO transactions with a total disclosed valuation of $137 billion.
The largest sponsor-backed transaction in 2009 is telling of the difficult economic climate. It involved Delphi Corp.’s bankruptcy. The Troy, Mich.-based auto part maker agreed to an $11 billion reorganization with debtor-in-possession lenders,
Fund-raising also retracted from the free flowing pledges obtained during the past few years. In 2009, roughly $64.5 billion in commitments were secured. The industry obtained $264.1 billion in commitments in 2008 and reached $300.8 billion in 2007. The 2009 level comes closer to the $71.9 billion secured back in 2004.
One group that struggled in particular in 2009 was mezzanine funds, which collected just $3.01 billion in commitments in the past 12 months. In 2008, these funds collected $26.1 billion in pledges. —Eamon Beltran