Private Equity Buy-and-Builds Down After Record Year

2007 saw a record amount of private equity “buy-and-build” transactions both in terms of the number of deals as well as total value.  Much of this came in the second half of the year as firms diverted greater amounts of attention to companies already in their portfolio as the credit crunch set in.  However, competition and bankers seeking more advantageous debt terms have helped push down the market thus far in 2008.

According to Dealogic, through the first two quarters of this year, the value of add-on acquisitions by private equity groups totaled $9.6B, down substantially from a record $53.2B in the previous two quarters and $35.8B in the first half of 2007.  It’s also important to remember that bolt-ons increase when asset prices surge, which is not the case at the moment.  Plus, you can’t set records each and every year…a fact that is lost on many people.

PIPE Dreams in France: Private Investment in Public Entities Up 100% in 2008 for France

PIPE (Private Investment in Public Entities) deals are up 100% in France thus far in 2008, more than twice the number (five) as last year.  PIPEs represent a good way for firms to invest money in down markets as they they allow firms a flexible method for a healthy and quick return thanks to pricing discounts, short term liquidity options and creative structuring.  The smaller size of PIPEs allows companies to sell only enough shares to raise what cash they need and are comparable to small public offerings that are confidentially marketed to a limited number of institutional investors.

French PIPE deals this year include Colony and Eurazeo raising their stakes in hotel operator Accor to around 30% and AXA Private Equity’s 11.43% stake in electrical components company Carbone Lorraine.  Look for more PIPE deals from Mid-cap French private equity firms to continue at a high clip for the next year.