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.