Aba april 5 pitch_book_adley_exits deck
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The document discusses the backlog of private equity exits due to investments made during the boom years of 2005-2008 that have not been exited. This backlog is causing private equity firms to hold investments longer and limiting distributions to investors. Exits are starting to increase in 2013 but the large volume of unexited investments from the boom years means the backlog issue will persist. Secondary buyouts and plentiful deal opportunities for lawyers are increasing as a result of the exit challenges faced by private equity firms.
![-The Exit Backlog
-The Current State of Exits
-Outlook for Exits and PE
Source:PitchBook
By Pudelek (Marcin Szala) (Own work) [CC-BY-SA-3.0
(http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons](https://image.slidesharecdn.com/abaapril5pitchbookadleyexitsdeck-130405072938-phpapp02/85/Aba-april-5-pitch_book_adley_exits-deck-2-320.jpg)
Aba april 5 pitch_book_adley_exits deck
- 1. Exits All Jammed Up ABA Business Law Spring Meeting Try the PitchBook Platform: Adley Bowden Email: demo@pitchbook.com Director of Research, PitchBook Phone: 1-877-267-5593 adley@pitchbook.com
- 2. -The Exit Backlog -The Current State of Exits -Outlook for Exits and PE Source:PitchBook By Pudelek (Marcin Szala) (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
- 3. The Problem: Private Equity Firms Have Been Unable to Exit Their Boom Era Investments US PE-Backed Company Inventory 8000 7000 6,771 6,861 6,438 6,100 6000 5,686 US PE-Backed Companies 5,413 5000 4,740 Year of Investment 4000 3,837 2009-2013* 2,990 2005-2008 3000 2,266 2000-2004 2000 This is 1000 the 0 Issue 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* As of Year Source:PitchBook
- 4. As a Result: Private Equity Firms Are Holding Onto Investments Longer Median Holding Period (years) by Exit Type 20% IRR in year 4 = 2x Exit 20% IRR in year 6 = 3x Exit Corporate Acquisition Secondary Buyout IPO Source:PitchBook
- 5. Which is Causing LPs to Grow Impatient due to the Lack of Distributions from Mid-Decade PE Funds US Median PE Fund DPI Over Time by Vintage Year 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2 3 4 5 6 7 8 9 10 11 Years Since Final Close 2000 2001 2002 2003 2004 2005 2006 Source:PitchBook
- 6. How Did this Happen? A Lack of Exits and an Imbalance Between New Deals to Exits is How U.S. Deals (excluding add-ons) vs. Exits New Deals These 2005-2008 Deals Should be Generating a Lot More Exits. Exits Source:PitchBook
- 7. So What is Happening? Exits are Up U.S. Quarterly PE Exit Activity $60 250 206 $50 181 200 $40 155 157 137 138 144 134 150 109 97 105 $30 99 76 100 $20 69 48 54 45 50 $10 $13 $4 $7 $17 $17 $25 $25 $42 $22 $35 $27 $34 $27 $30 $25 $57 $11 $0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2009 2010 2011 2012 2013 Capital Exited ($B) # of Exits Source:PitchBook
- 8. Emphasize selling portfolio companies while being highly selective with regards to new investments. Madison Dearborn Source:PitchBook
- 9. Secondary Buyouts Gaining Momentum as a Legitimate Buy/Sell Option Private Equity Secondary Buyout Activity 120 108 100 79 80 72 65 68 60 55 54 55 40 32 33 31 31 31 18 20 13 13 12 - 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2009 2010 2011 2012 2013 Source:PitchBook
- 10. The Outlook: Its Rosy for 2013 and Beyond US PE-Backed Company Inventory 8000 7000 6,771 6,861 6,438 6,100 6000 5,686 US PE-Backed Companies 5,413 5000 4,740 Year of Investment 4000 3,837 2009-2013* 2,990 2005-2008 3000 2,266 2000-2004 2000 This is 1000 why Its 0 Rosy 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* As of Year Source:PitchBook
- 11. Side Affect #1: Lots of Deal Opportunities for Lawyers Source:PitchBook
- 12. Side Affect #2: PE Fundraising Has Been Sluggish US Private Equity Quarterly Fundraising $80 60 $70 49 50 $60 40 38 38 40 $50 31 31 28 29 $40 26 26 27 25 25 26 30 23 $30 20 20 $20 10 10 $10 $69 $35 $10 $26 $17 $13 $6 $10 $43 $18 $15 $14 $20 $42 $19 $29 $24 $0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2009 2010 2011 2012 2013 Capital Raised ($B) # of Funds Closed Source:PitchBook
- 13. 際際滷 Affect #3: A Slow Moving Shakeout? PE Investors that have not raised a fund since 2009 140 125 119 120 100 86 80 PE Firms 71 71 60 38 40 31 24 20 16 17 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Year of Last Closed Fund Source:PitchBook
- 14. Exits All Jammed Up ABA Business Law Spring Meeting Try the PitchBook Platform: Adley Bowden Email: demo@pitchbook.com Director of Research, PitchBook Phone: 1-877-267-5593 adley@pitchbook.com