North American PrivateEquity in Review
August 2009
In association with:
Contents
Hogan & Hartson foreword3Buyout and exit deal trends5Industry trends9North American private equity deals11Private equity activity tables15Financial advisor activity tables17Legal advisor activity tables19Beyond the Numbers: H1 2009 Review and Outlook21Appendix24Contacts26Notes27
North American Private Equity in Review
3
Private equity has seen an overall decline in deal flow in thepast two years, but the decline seems to be decelerating, ormay have bottomed. Buyout volume dropped by an astounding49% from Q3 to Q4 last year, and the decrease in deal volumefrom Q1 to Q2 of this year is hardly noticeable, decreasing just4% from 96 to 92 transactions. Exit activity is exhibiting similarbehavior: after declining 44% from Q3 to Q4 last year, exitvolume this year has been on a slow but steady rise, gainingan average of two deals in each quarter.In terms of value, the largest deals in the past two quartershave been in the Financial Services and Healthcare sectors.Together, these sectors make up the top six transactions ofH1 2009: in Financial Services, all three of these deals relatedirectly to the restructuring banking industry, and each of thethree Healthcare deals are exits. Financial Services represented69.2% of aggregate buyout value, while Healthcare & LifeSciences showed its strength in exit value, where it accountedfor 66.1%.The US$13.9bn acquisition of IndyMac Federal Bank byOneWest Bank places the Financial Services sector at the topof the buyouts-by-value chart. The second largest deal was inthis industry as well, and although the transaction was notultimately closed, it was not for lack of private equity interest.In April, UK based CVC Capital Partners’ affiliate Blue Sparkleannounced its acquisition of California based iShares, theexchange traded funds unit of UK based Barclays, however thedeal included a go-shop clause that eventually placed the targetinto the hands of a higher bidder. In May, BlackRock paid CVCCapital Partners a US$175m break-up fee to acquire iShares aspart of its US$13.6bn acquisition of Barclays Global Investors.That same month, private equity moved into the commercialbanking space with a US$900m investment into Florida basedBankUnited by a consortium involving WL Ross & Co. and JCFlowers & Co, in a deal viewed as a sign that private equity iswarming up to participation in US based banks’ recovery.Meanwhile, Healthcare deals show private equity reapingsubstantial benefits from the industry’s highly competitiveclimate. The third largest announced deal was the sale ofStiefel Laboratories to industry giant GlaxoSmithKline, whichmarked a US$3.3bn exit by Stiefel’s parent private equity firm,Blackstone Group Holdings. This deal came on the heels oftwo other lucrative Healthcare exits, both of which were drivenby similar strategic initiatives. In February, GTCR Golder Raunersold its US based pharmaceutical research company H.Lundbeck to its Denmark based counterpart, Lundbeck Inc.The same month, US based medical device companyMedtronic Inc. paid US$700m to Apax Partners, HealthCap,Maverick Capital and Sofinnova Partners, for cardiovascular-focused device company CoreValve Inc.Hogan & Hartson LLP is an international law firm with morethan 1,100 lawyers practicing in 25 offices worldwide. Ourprivate equity practice brings a strong “sector approach” todeal structuring, bringing to bear a legal team that couplestransactional experience with our leading national andinternational regulatory lawyers. Through our private equitycoordinating group, we exchange information across officesconcerning best practices, transactions, industry knowledge,business contacts, deal opportunities, and documentprecedents. Our lawyers recently have participated inleveraged acquisitions and venture capital investmentsinvolving the United Kingdom, Belgium, Denmark, France,Germany, Norway, the Netherlands, Poland, Russia, Mexico,China, and other parts of Asia. We have the substantive depthto serve as acquisition, financing, regulatory, and securitiescounsel, and strive to build relationships based upon the simpleprinciple that whatever the issue, we will deliver the answersyou need, when you need them.
Hogan & Hartsonforeword
Hogan & Hartson LLP is pleased to present the half-year 2009 edition of North American Private Equity inReview in association with Mergermarket.
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North American Private Equity in Review H109
mergermarket's private equity review for the first half of 2009.
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