All things considered, this seems to have been a decent year for private equity dealmaking:
Private equity-backed M&A is still way below pre-crisis levels, with values of US$74bln for Q3 this year reflecting a 77% drop in activity from the peak in Q2 2007. However year-to-date activity shows that there has been a return to deal volumes seen in 2008. With figures reaching US$195 billion so far this year up 78% from the same period last year.
The second largest M&A deal so far this week helped fuel this activity. A leveraged buyout transaction in which a special purpose acquisition vehicle formed by TPG Capital LP and Leonard Green & Partners LP, agreed to acquire the entire share capital of J Crew Group Inc, a New York- based retailer of women’s and men’s apparel, shoes and accessories, for US$2.7 billion.
That’s from the weekly investment banking update by Thomson Reuters.
We haven’t written much about this, but perhaps the biggest reason for private equity to celebrate this year is how unbruised the industry has come out on the other side of financial reform.
Yes, some of the bigger firms are worried that they’ll be considered systemically important by the FSOC (under Dodd-Frank), and there are spinoffs coming for the private equity units of banks.
But those are fairly trivial compared with the changes that will take place elsewhere in the financial landscape. And of course, yet another attempt to tax carried interest at ordinary income rates was beaten back, this time when a jobs bill to which it was attached died in the Senate.
That fight isn’t over yet, but if it couldn’t get done in a year when there was so much momentum for financial reform and while the Democrats still had big majorities in both houses of Congress, we question whether it will happen now that Republicans will control the House and the Democrats have only a slim Senate majority.
Nope, not much to complain about this holiday season.
Related links:
Will the real PE performance numbers please stand up – FT Alphaville
In case of interest: Obama vs hedgie – FT Alphaville