Deal Value and Fundraising Fall for Private Equity in the First Quarter

​Private equity activity slowed in the first quarter of 2018, according to Pitchbook. At 1,101 completed transactions in the first quarter, deal volume declined 4.0% from the first quarter of 2017. Surprisingly, deal value, at $88.8 billion, fell 32.8% over the same period. Pitchbook noted an expectation for an uptick in the value in the coming months, as information regarding private transactions is slow to surface.

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​An interesting observation in Pitchbook’s first quarter report is that add-on activity set a record high of 70% of buyout activity. The author suggests that debt repayment and multiple expansion have become less useful, as managers seek buy-and-build strategies. Nearly one-third of PE-backed companies will acquire a company as an add-on, compared to roughly 20% in the early 2000s.

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Along with a decline in general activity, fundraising among private equity firms also declined, at $36.6 billion across 55 vehicles. Firms seeking to raise $1 billion or more accounted for over half of capital raised in the first quarter.

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