Q2 exits: Market tepid in second quarter

  • Blackstone’s $2.5 bln exit of La Quinta hotels leads in value
  • U.S.-based PE-backed M&A: 132 Q2 deals, $24.5 bln
  • Consumer lead by count, 15.9 percent of all exits

Private equity M&A exit activity took a dive, both in value and deal count, from 2018’s opening quarter.

A lot of uncertainty remains in the market as firms sail through the murky waters of regulatory ambiguity and a possible downturn.

The macroemanations rippled into the M&A landscape, with 132 U.S.-based PE-backed exits totaling $24.5 billion for Q2 through June 20.

While there’s still time for those numbers to fill out, they represent steps down from the three preceding quarters. The deal volume and value also lag the six-year quarterly averages of 146.8 deals and $26.2 billion, albeit without the final 10 days of Q2 accounted for.

Of this quarter’s 132 exits thus far, 41 had disclosed values, eight of which cleared the billion-dollar hurdle.

Of transactions with disclosed value, hotel operator La Quinta Holdings led the pack. It was acquired by Wyndham Worldwide, another hospitality company, from Blackstone Group for about $2.5 billion.

Next up, CI Capital Partners dealt Ply Gem Holdings, a maker of residential exterior building products, to Clayton Dubilier & Rice for more than $2.2 billion.

The third largest was TPG Capital selling its interest in Warranty Group, a Chicago direct insurance carrier, to Assurant for just under $1.9 billion.

Consumer products and services led all industries by exit count in the second frame of 2018. The sector accounted for 21 (15.9 percent) of the 132 deals. High technology followed with 18 deals (13.6 percent) and industrials placed third with 17 deals (12.9 percent).

IPOs hit the brakes too

PE-backed IPOs nearly cut down to half of last quarter. Q2 2018 saw six companies make their debuts on the public market, down from 11 in Q1. The combined size of these offerings was $2.5 billion.

The largest offering came from GreenSky, a fintech company providing technology to banks for loans to consumers. GreenSky went public for $836 million and is backed by TPG Capital, DST Global, Iconiq Capital and Wellington Management.

GrafTech International, sponsored by Brookfield Asset Management, followed. GrafTech, a producer of graphite electrode products essential to the production of electric arc furnace steel and other ferrous and non-ferrous metals, entered the marketplace for $525 million.

As the accompanying “PE-Backed IPO Exits by Quarter” graph shows, IPOs are an erratic industry, accompanied by a history of sharp fluctuation without much, if any, correlation.

Download exit data and charts here: Q2 2018 Exits


Additional Attachments

Buyout M&A Exits By Quarter

PE-Backed IPO Exits By Quarter

Q2 2018 Buyout Exits Through M&A

Q2 2018 M&A Exits Industry Breakdown

Select Q2 2018 Buyout Exits Through IPO