TREND REPORT: Debtwire Par and Mergermarket overview of US buyout and financing trends 1H19

29 July 2019

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Debtwire Par has partnered with its sister product Mergermarket to produce an original and comprehensive overview of US buyout and LBO financing trends, including extensive advisory league tables for more insight into industry players.
Among the main trends in the first half of 2019:
  • Private equity buyout activity increased by value, while seeing significantly fewer deal announcements compared to the same period last year.
  • Lender appetite was strong in 1H19, with leveraged loan issuance backing LBOs amounting to USD 75.7bn. The institutional loan component, the focus of buysiders’ attention, totaled USD 60.8bn.
  • While the volume of high yield bonds backing LBOs is still much lower than for leveraged loans, the increase in high yield bond issuance reflects the pivot toward increased expectations of future interest rate cuts, and the resulting inflows into high yield bond funds this year.
  • The Technology sector was the most active for the buyout market by both deal value and deal count and made up 26.7% of all US buyout activity in the first half of the year.
  • The increase in deal activity comes as targets in the Technology sector have commanded increasingly higher EBITDA multiples, nearly doubling since 2016.
  • On the financing side, over half of LBO deals were levered 6x or more in 1H19, with 14% in the 7x or greater category. Larger EBITDA addbacks in recent years have pushed leverage even higher on an unadjusted basis.