Private equity investment doubled: Bain & Company

Private equity investment value reached an all-time high of $1.1 trillion in 2021, doubling from $577 billion in 2020, according to a report from Bain & Company.
Private equity deals in 2021
Deal size, not deal count, was behind this increase. The number of private equity deals greater than $1 billion roughly doubled in 2021, with average deal size reaching $1.1 billion, increasing 57 percent to pierce through the $1 billion mark for the first time, says the report.

The opportunity to put large amounts of private equity capital to work produced a sharp increase in public-to-private (P2P) deals, especially in North America and the Asia-Pacific region. These take-private transactions soaked up $469 billion in capital globally, a 57 percent one-year increase, and were largely responsible for 2021’s record-setting value total.

The key differentiator of today’s P2P deals is their smaller size. Today’s P2P deals are often done by one to two buyers with deep expertise in the sector, versus the consortia of buyers required for the large deals we saw in 2006-07.

By deploying large amounts of capital quickly over the last three years, buyout firms have seen their share of M&A activity globally rise to 19 percent, its highest level since 2006. The push, however, has come at a cost: average buyout multiples in 2021 rose to 12.3x in North America, and 11.9x in Europe.

One in three buyouts now involves a technology company. There was continued growth in sectors such as fintech, healthcare and business services.

Overall, buyout funds unloaded $957 billion in assets globally, more than doubling a strong 2020 total and beating the five-year average by 131 percent. Special-purpose acquisition company (SPAC) deals were particularly notable, increasing 325 percent from the year before and reaching $158 billion.

Global funds raised across the full private capital spectrum hit $1.2 trillion. Buyout funds raised $387 billion in 2021, their second-best year ever.

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