Deal sizes are 'swelling' because private equity firms played a bigger role than ever in 2018 M&A
- Though the number of deals declined in 2018, the median M&A deal price grew across North America and Europe in 2018, according to PitchBook's annual M&A report.
- Private equity's role in M&A grew in 2018. PE made up 34.2% of all M&A deals in North America and Europe in 2018, according to PitchBook. That's up from 29.9% in 2017, and 27.4% in 2016.
- As PE's role grew, so did the value of deals. The median deal price in M&A hit a record high of $48.2 million in 2018, up 34.4% from the year before.
Private equity firms have stepped up their game.
That segment of active acquirers - which includes heavy-weights like the Blackstone Group and the Carlyle Group - made up 34.2% of all M&A deals in North America and Europe in 2018, according to PitchBook's annual M&A report. That's up from 29.9% of deals in 2017 and 27.4% of deals in 2016.
While the over-all volume of deals has declined since 2015, the median deal price is on the rise.
The median M&A deal across both North America and Europe hit a record high of $48.2 million in 2018, according to the report, up 34.3% from the year before. In North America specifically, the median was $60 million, up 22.4% from 2017. In Europe, the median was $34.2 million, up 34.2% from 2017.
"Deals have been persistently larger in North America than Europe over the long term, a trend we have witnessed across VC, PE, and strategic M&A. Part of the reason for swelling deal sizes is the growth in PE as a proportion of overall M&A," PitchBook said in the report.
In part, this is because PE firms have raised larger funds in recent years, which has given them the financial leeway to participate in competitive bidding processes, and pay more for deals.
By the end of 2018, the median leveraged buyout was $140 million, which is nearly triple the median size of an M&A deal, according to the report.
Leveraged buyouts are acquisitions made with a mix of equity and debt, which is a common practice for private equity firms.
With multiple deals over $10 billion, it's no wonder the median deal price rose.
Among the biggest deals were JAB Holding's $21 billion Dr. Pepper Snapple acquisition, and Blackstone's $17 billion buyout of 55% Thomson Reuters' financial and risk business.
Slightly under the $10 billion in Europe, KKR bought out Unilever's spreads business for $6.7 billion, and Hellman & Friendman bought the payments processing firm Nets for $5.3 billion.