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October 2016: Private Equity Digest

October 21, 2016 download PDF

In this edition of the Paul, Weiss Private Equity Digest, we discuss China-U.S. crossborder deal risks for U.S. sellers and possible ways to address those risks.

In market news, U.S. sponsor-related M&A activity (as measured by dollar volume) had held fairly steady levels since an uptick starting in May of this year before plummeting last month to $13.9 billion. U.S. sponsor-related M&A activity as measured by number of deals has been more variable, reaching 182 deals in June (a high level mark for 2016) before dropping to 130 deals in July 2016.  Global sponsor-related M&A activity across the same time period exhibited similar trends although with slightly less volatility month-to-month.  U.S. sponsor-backed exit activity was stronger during the summer as compared to the spring, with average deal volume as measured by dollar value up approximately 23% during June to August relative to March to May.  We note that there was a big uptick in secondary buyouts in September 2016, with dollar volumes of secondary transactions hitting $68.9 billion , a total that almost matched the $72.1 billion in secondary transactions for the prior 11 months.

September saw a relatively low level of U.S. private equity fundraising (both by the amount of capital raised and the number of funds closed) compared with the stronger months that we saw from February to June of this year.    This past summer, total dollar value raised in the U.S. decreased from the $61.6 billion raised in the spring to $42.4 billion and the number of funds raised decreased from 70 in the spring to 68.

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